Takeaway key: Consumers in all income brackets are increasingly living wage-to-earth, including those earning higher incomes.
The Current Paycheck-to-Paycheck Landscape
The number of consumers living paycheck to paycheck has been steadily increasing since April 2021 and was 64% in January 2022 – 12 percentage points more than April 2021 – with a jump of 3% in just one month between December 2021 and January 2022.
Data shows that 48% of consumers who earn more than $100,000 per year claimed to be alive paycheck to paycheck January 2022 — compared to 42% in December 2021. This number has fluctuated since May 2021when it was 39%, before reaching a peak of 50% in November 2021.
The share of those who win between $50,000 and $100,000 who report living paycheck to paycheck is also on the rise. In May 2021, 53% of these middle-income consumers were living paycheck to paycheck. In January 202267% said they live paycheck to paycheck – up from 66% in December 2021.
Wealth and life from paycheck to paycheck
Paycheck-to-paycheck consumers fall into two categories: those who are and those who have no trouble paying their bills.
The share of consumers who live paycheck to paycheck but have no trouble paying their bills has seen the biggest increase since October 2021especially among high-income consumers.
PYMNTS research finds that consumers living paycheck to paycheck and able to pay their bills increased by 42% in January 2022from 39% in December 2021, while 22% of paycheck consumers still struggle to pay their monthly bills. Research continues to find continuous changes in the proportion of consumers living paycheck to paycheck. From January 2022the share of consumers who don’t live paycheck to paycheck fell from 39% to 36% in December 2021. Only 12% of consumers who earn more than $100000 said they live paycheck to paycheck and struggle to pay their bills in January 2022. This rate is significantly higher among those who earn $50,000 for $100,000 per year (19%) and those earning less than $50,000 (34%). The ranks of paycheck-to-paycheck consumers struggling to pay their monthly bills saw little fluctuation.
Impact on savings
The data indicates that the difference in average savings between consumers who live paycheck to paycheck and struggle to pay their bills and those who don’t struggle widens significantly across the bands. lower income. The largest gap in savings levels was between those earning less than $50,000 per year living paycheck to paycheck and struggling to pay their bills, who reported average savings of $788compared to $4,369 for those who don’t struggle.
Manage an emergency expense
Research shows that among consumers who earn more $100,00023% who live paycheck to paycheck and struggle to pay their bills say they wouldn’t be able to pay a $400 emergency expense. This share of consumers who would not be able to afford such an emergency expense naturally increases among middle- and low-income consumers who live paycheck to paycheck and struggle to pay their bills. Fifty-two percent of those earning less than $50,000 and 38% of those who win $50,000 for $100,000 said they wouldn’t be able to afford a $400 costs.
Among consumers earning more than $100,000 who live paycheck to paycheck and struggle to pay their bills, 33% would use a credit card to cover an emergency expense and pay it off over time, while 20% would use a credit card and repay it in full. High-income consumers who live paycheck to paycheck but have no trouble paying their bills are more likely to use a credit card and pay it off in full (23%), and less likely to use a credit card and pay for it over time (21%).
“With inflation up 7.5% over the past 12 months, consumers of all income brackets are struggling to find a way to make ends meet,” said Anuj Nayar, head of financial health at LendingClub. “Every day we see Americans relying on credit cards as a crutch, which is a horrible way to borrow money if you don’t intend to pay off the full balance at the end of This is why many of our members use LendingClub personal loans as a tool to consolidate or refinance credit card debt with a fixed rate so they can repay their debt responsibly and get into the habit of saving.”
To view the full report, visit: https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-wealth-divide-income-differences
The New Reality Check: The Paycheck-To-Paycheck Report is based on a census-balanced survey of 2,633 complete responses from U.S. consumers conducted from Jan. 11 to Jan. 18, 2022as well as an analysis of other economic data.
LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. LendingClub Bank is the leading digital marketplace bank in the United States, where members can access a wide range of financial products and services designed to help them pay less when they borrow and earn more when they save. Based on over 150 billion cells of data and counting $70 billion in lending, our artificial intelligence-powered credit decision and machine learning models are used throughout the customer lifecycle to expand seamless access to credit for our members, while generating adjusted returns compelling risk for our loan investors. Since 2007, more than 3.9 million members have joined the Club to help them achieve their financial goals. For more information about LendingClub, visit https://www.lendingclub.com.
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SOURCE LendingClub Corporation