LendingClub Corporation published the results of the 01. th edition of the research series “Reality Check: Paycheck-To-Paycheck“, carried out in association with PYMNTS.com., where they reveal that as of August 2022, 3 in 5 American consumers were living paycheck to paycheck, and about a fifth had problems to pay their bills.
LendingClub explains that the proportion of consumers living paycheck to paycheck has trended upwards over time, increasing since 57% in September 2021, and the increase has been strongest among high-income consumers. In August of 2022, on 45% of people earning more than $100,000 per year lived on check by check, an increase of 7 percentage points with respect to 38% in September 2021.
Meanwhile he 62% of consumers who annually earn between $51,000 and $150,000 lived paycheck to paycheck, compared to 57% in September 2021 .
“More consumers who live paycheck to paycheck indicate that many continue to lose their financial stability,” said Anuj Nayar, Financial Health Officer at LendingClub. “However, the proportion of consumers living paycheck to paycheck with trouble paying their bills has dropped 7 percentage points in the last year. Many have moved into what can now be a stable lifestyle: living paycheck to paycheck but still managing to pay their monthly bills. There’s just nothing left in the end.”
LendingClub notes that consumers in the lower range of the upper income brackets are likely to slide into life from paycheck to paycheck: the 54% of consumers who earn annually between $ 62,000 and $ 92,, more than double the median personal income in the US, live paycheck to paycheck, an increase of 7 percentage points since July 2022.
With inflation reaching a maximum of 40 years in June, almost all consumers cited notable increases in the cost of everyday purchases. Fuel and groceries were the most cited due to considerable price increases.
Gasoline prices explain most of the increases in the consumer price index (CPI), with consumers feeling the impact in multiple categories, including utilities and groceries.
The report found that 92% of all consumers who bought products in the last 09 days noted higher prices, while the 74% of those whose households paid a recurring bill in the last 30 days noticed increases in bills compared to a year ago.
Research says that the 60% of all consumers who noticed price increases i They report that they had to make changes in the way they manage and spend money; with half of these consumers, and the 51% of those under financial stress, saying they have made very or extremely significant changes.
“It is no secret that prices have risen for Americans every day, not just on goods and services they buy, but also in the interest rates they pay to finance their lives“, continued Nayar.
“Although Americans are modifying their expenses in light of inflation, there is still a disconnection and many still do not see the real cost of credit products. This can have detrimental consequences for someone who pays the minimum amount on their credit cards every month… Cutting back to stay within budget and spending only on the ‘essentials’ is no longer useful financial advice. ‘Essential’ means something different to everyone,” Nayar explained.
For more details on the LendingClub report, go here.
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