Thanks to inflation, 64% of Americans now live paycheck to paycheck

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The first rule of personal finance is that you should always set aside a portion of your salary for retirement savings and an emergency fund. But that’s not possible if you’re living paycheck to paycheck just to pay the bills — and a growing number of Americans are doing it because of inflation, according to a new survey from LendingClub.

See: How Much Does Inflation Really Cost the Average Family Each Month?
Find: Social Security COLA No Match for Inflation – These Retirement Savings Options Might Help

The survey of 2,633 US consumers, conducted in partnership with PYMNTS.com and released last week, found that 64% of Americans were living paycheck to paycheck in January 2022. That was up compared to 52% in April 2021 and slightly higher than the previous one. month.

Nearly half of respondents (48%) with an annual income above $100,000 were living paycheck to paycheck in January – an increase of 9 percentage points from June 2021 and 42% in December 2021.

Two-thirds of middle-income earners — those earning between $50,000 and $100,000 a year — said they were living paycheck to paycheck in January. That was roughly the same percentage as December, but up from 53% in May 2021.

Paycheck-to-paycheck consumers fall into two basic categories: those who struggle to pay their bills and those who don’t, perhaps because they can dip into their savings. The share of those who have no trouble paying their bills has seen the biggest increase since October 2021, especially among high-income consumers.

It’s not hard to see why so many Americans live paycheck to paycheck. It basically boils down to this: wage increases cannot keep up with inflation which has reached 7% and more – the fastest pace in four decades.

As previously reported by GOBankingRates, real average inflation-adjusted hourly earnings fell 2.4% from December 2020 to December 2021, according to the Bureau of Labor Statistics.

The result is that a greater share of Americans’ paychecks are spent on basic expenses, leaving little or nothing for savings.

“We all see the cost of everything skyrocketing,” Anuj Nayar, financial health officer at LendingClub, told CBNC. “You have to eat, you have to commute. These are not discretionary expenses.

That’s true even if you earn a six-figure salary, which essentially puts you in the middle class if you live in high-value cities like San Francisco and New York.

“Depending on where you live, $100,000 might not get you that far,” Nayar said.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has won awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.

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