Number of Paycheck-to-Paycheck Consumers Continues Inching Toward Record Highs
In light of the recent election, PYMNTS Intelligence found that more than 66 percent of consumers across all income levels are living paycheck to paycheck, which is up from 56 percent who said the same just two years ago. The pressures of living paycheck to paycheck were at the forefront of consumers’ minds as they voted, and the Associated Press noted that 30 percent of voters felt their family finances were falling behind.
Across all income levels, households are prioritizing their funds for necessary expenses rather than splurging. Only 14 percent of lower-income consumers are splurging, and only 21 percent of the highest earning consumers are splurging. 57 percent of the lowest earning consumers say they have large amounts of debt, implying that there isn’t enough money for splurging anyway.
16 percent of lower-income consumers say they have lived paycheck to paycheck due to drawing down savings, while 22 percent of higher-income consumers say the same. However, households with less take-home pay don’t have as much savings on hand to begin with. Consumers earning over $100,000 a year have roughly $15,000 in savings, while those earning less than $50,000 have an average of $5,300 in savings.
Unsurprisingly, credit cards and buy now pay later (BNPL) products remain lifelines. About 83 percent of all consumers have credit cards, with lower-income consumers having an average of one card and higher-income consumers having just under three cards on average.
Credit card installment plans have also been widely popular; 47 percent of consumers utilized such plans to buy groceries, and 44 percent used these plans to purchase clothing. 26 percent of consumers who live paycheck to paycheck say they would be very or extremely likely to use BNPL within the next year.
