Conventional wisdom would indicate that the more money you make, the less likely you are to live paycheck to paycheck. And, if a study or report had come out and said that, I likely wouldn’t have written about it. So, without me even saying anything more, you can likely guess that this is a post detailing the results of a report that revealed that even higher-earning households are spending just about everything they earn every week.
By the numbers: According to the report, which was release by the Bank of America Institute ,about 26% of households are spending more than 95% of their income on necessities like housing, food, and utilities, leaving little room for discretionary spending or savings. When considering households that spend more than 90% of their income on necessities, this figure rises to 30%.
- Lower-income households are more likely to live paycheck to paycheck, with 35% of households earning under $50,000 a year falling into this category — up from 32% in 2019.
- Surprisingly, even among higher-income households, many are struggling: around 20% of those earning more than $150,000 per year report living paycheck to paycheck, largely due to high fixed costs like mortgages and property taxes.
The big picture: Generational trends also play a role, with Gen X and Baby Boomers more likely to report paycheck-to-paycheck living compared to younger generations. Regionally, states in the South Atlantic area have the highest proportion of households in this situation, while the Northeast Mid-Atlantic region has the lowest.
Between the lines: The rising cost of living, particularly in housing, is a driving force behind this increase in financial strain. Households living paycheck to paycheck tend to have 90% higher necessity spending compared to those who are not in this situation.
