Key takeaways

  • Statistics vary, but between 55 percent to 63 percent of Americans are likely living paycheck to paycheck.
  • Three in four Americans who earn less than $50,000 are living paycheck to paycheck, compared to roughly two in three of those making $50,000 to $100,000.
  • Paycheck-to-paycheck living can result in missed or late payments, which can cause your credit score to drop — leading to fees, penalties, higher financing costs and difficulty qualifying for future credit.

While a significant number of Americans enjoy the advantage of secure jobs and ample savings, millions lack the necessary funds to cover unforeseen costs or sudden emergencies. Consider that 72 percent of Americans are not completely financially secure, and 26 percent never expect to be. The prevalent phrase used to describe this situation is “living from paycheck to paycheck,” signifying a lack of funds to pay for future expenses until your next paycheck arrives.

Curious how many Americans live paycheck to paycheck? Nearly fifty-five percent of employees indicate they fit this criteria, according to a 2023 MetLife poll.

If you’re living paycheck to paycheck, want to learn how to stop living paycheck to paycheck or are simply curious about the latest relevant statistics, read on to learn more, including how your credit may be impacted and how to budget in this situation.

Living paycheck to paycheck statistics
  • 63 percent of U.S. consumers lived paycheck to paycheck in November 2022 (PYMNTS)
  • 55 percent of workers reveal they are living paycheck to paycheck, and 52 percent don’t have a three-month savings cushion – down from 62 percent in 2022 (MetLife)
  • The average American needs to earn $233,300 to feel financially secure or comfortable (Bankrate)
  • 45 percent of Americans need to earn $100,000 or more to feel financially comfortable (Bankrate)
  • One-third of U.S. consumers say they aren’t currently saving any money and, of this group, 60 percent don’t have savings (PYMNTS)
  • 57 percent of Americans don’t have enough in savings to cover a $1,000 emergency expense (Bankrate)
  • 64 million Americans have debt in collections (Urban Institute)
  • American workers can make it an average of 9.5 weeks without a paycheck (Zippia)
  • Americans are more than two times more likely to feel financially insecure than secure. Slightly more than 1 in 4 (28 percent) Americans say they are completely financially secure (Bankrate)

What does living paycheck to paycheck mean?

While there’s no official definition of what living paycheck to paycheck means, the expression commonly refers to people who are unable to pay their bills if they suddenly become unemployed. Those who live paycheck to paycheck will nearly be out of money between paychecks and unable to pay for basic living expenses if they fail to receive their next paycheck.

“A person is living paycheck to paycheck when their paycheck is used to cover their necessary expenses with no money left over,” explains Dr. Thembi Aquil, a financial wellness coach.” There is no money for anything extra, and often the paycheck may not be enough to cover their necessities.”

Your income level also isn’t necessarily an indicator of living paycheck to paycheck. Just because a household is living paycheck to paycheck doesn’t necessarily mean that they have a low income. For example, there are workers with advanced degrees that could be living paycheck to paycheck for various reasons, including industry downturns and underemployment.

Others might earn an above-average salary but pay equally high living expenses. These workers may live in cities with a high cost of living, have a large family or simply be spending at or above their means. For example, 16 percent of U.S. adults with annual incomes of $100,000 to $199,000 say they are living paycheck to paycheck, according to data from career-planning site Zippia, as well as 8 percent of those with incomes of over $200,000 per year.

The COVID-19 pandemic contributed to the number of Americans living paycheck to paycheck, data shows. According to the same Zippia findings, 53 percent of U.S. adults say they weren’t living paycheck to paycheck before the pandemic. Since the pandemic started, though, 63 percent say they have been living paycheck to paycheck. Inflation is also another factor contributing to diminished savings, as wages rarely rise as quickly as prices do during periods of high inflation.

“Everything – even the most basic staples, like eggs, bread and milk, cost more in 2023 due to inflation, post-COVID supply chain hiccups and the impact of these issues on businesses. Insurance premiums on both home and auto insurance have risen dramatically as well due to severe storms and high prices on repairs and parts,” Michael Orefice, senior vice president of Operations for SmartFinancial, says.

“What a person budgeted for basic needs only a few years ago is no longer enough,” he continues. “If a person was living paycheck to paycheck then, they are likely now accruing balances with interest on credit cards. It’s important to find a way out of this vicious cycle.”

Living paycheck to paycheck demographics

Living paycheck to paycheck by income

While people of any income can potentially live paycheck to paycheck, those with the lowest incomes tend to experience the highest rates of income insecurity. According to a recent PYMNTS report, as of November 2022, 76 percent of U.S. adults who make less than $50,000 are living paycheck to paycheck, compared to 65.9 percent of those making $50,000 to $100,000 and 47.1 percent making more than $100,000.

That’s an increase across the board compared to May 2021, when the data was first collected. Among those living paycheck to paycheck at that point were, by income: less than $50,000 (71.7 percent), $50,000 to $100,000 (52.9 percent) and more than $100,000 (38.7 percent).

Per the most recent PYMNTS data from June 2023, 61 percent of adults are now living paycheck to paycheck. However, comparatively fewer individuals in the higher income brackets have encountered difficulties in meeting their financial obligations. Among those earning $100,000 or more, the PYMNTS report revealed that only 45 percent reported the struggle of living paycheck to paycheck.

Bankrate’s Financial Freedom Survey supports these disparities, finding that 36 percent of those earning under $50,000 a year reported feeling financially insecure, while only 12 percent earning $100,000 or more reported the same.

Living paycheck to paycheck by generation

There are also differences in how various generations handle their finances. The PYMNTS report found that millennials, in particular, are the most likely age cohort to report not saving and having no savings built up.

According to the data, 14.4 percent of baby boomers and seniors (those born between 1946 and 1964), 18.2 percent of Generation X (those born between 1965 in 1980), 20.3 percent of bridge millennials (those born on the cusp of Gen X and millennial; typically including those born between 1980 and 1989), 21.7 percent of millennials (those born between 1981 and 1996) and 15.4 percent of Generation Z (those born between 1997 and 2012) are living with no savings.

Age group Percentage of those who aren’t saving and have no existing savings
Baby boomers and seniors 14.4%
Gen X 18.2%
Bridge millennials 20.3%
Millennials 21.7%
Gen Z 15.4%

For comparison’s sake, Bankrate’s Financial Freedom Survey found that Gen X is the generation least likely to feel completely financially secure (19 percent), while baby boomers were the most likely, at 32 percent.

Living paycheck to paycheck by gender

There are gender disparities, too. Women are more likely than men (57 percent compared to 54 percent, respectively) to report that their income has not kept up with rising expenses due to inflation, according to a 2022 Bankrate survey. Although these numbers are close, it’s in line with other data that shows women generally earn less than men.

Based on the results of a Bankrate survey, women say they would need to earn roughly $237,000 annually to be comfortable and about $502,000 a year to feel rich — which is nearly $37,000, or 8 percent, more than men.

Can living paycheck to paycheck impact your credit?

Although living paycheck to paycheck doesn’t have a direct or sudden impact on your credit, it can lead to several indirect consequences. For instance, lacking substantial savings often results in utilizing credit cards for significant expenses.

“Those living paycheck to paycheck often turn to credit cards to make up for a cash shortfall or to pay for emergencies or purchases that don’t fit within their budgets,” says Amy Maliga, a financial educator with Take Charge America, a national nonprofit credit counseling and debt management agency. “This can lead them to being overextended, carrying balances month-to-month and paying high interest rates without a clear path to pay off the debt.”

Accumulating credit card debt can ultimately damage your credit score. This becomes a particular concern for those who are in a paycheck-to-paycheck situation, as the prospect of late payments can be a constant worry.

“Those who do not make timely payments on all their bills will see their credit scores drop,” cautions Orefice. In fact, your credit score can plummet several points if you miss a credit card payment by only 30 days.

Among U.S. adults polled for a January 2023 Bankrate survey, 35 percent carry credit card debt from month to month — up from 29 percent in 2022. And as inflation continues to be a problem, and interest rates rise, those who are carrying a balance can expect to pay even more credit card interest. That’s because nearly all credit cards have variable interest rates that are tied to the prime rate.

And if the payments become greater than what someone can afford when living paycheck to paycheck, not making the minimum payment can have a devastating effect on their credit. Having poor credit will further increase the cost of borrowing money, leading to a potential spiral of increased debt and increased interest rates.

How to budget when living paycheck to paycheck

For those living paycheck to paycheck, the priority should be to save as much as possible to create and grow an emergency fund. While this can be a challenge, the goal of saving money comes down to two factors: increasing your income and reducing your expenses.

There are generally two ways to increase your household income. First, you can take on additional work, either by increasing your hours at your current job or taking on a second job of some sort. In fact, having a second, non-employment income has become increasingly popular. This strategy, often called a “side hustle,” can involve nearly any kind of income-generating activity including childcare, pet care, reselling goods online or driving for a rideshare or food delivery company.

In fact, 41 percent of U.S. adults with a side hustle in 2022 needed the money to pay for everyday expenses, a Bankrate survey found — up from 31 percent in 2019.

The other way to increase your income is to earn more from your existing line of work. You could do this by asking for a raise or changing to a higher-paid position. Thankfully, today’s strong labor market can give employees an advantage when negotiating with employers.

To reduce expenses, your first goal should be to create and stick to a realistic budget. Reducing credit card debt should be one of your first goals, as interest payments can be a large expense with no direct benefit. One way to quickly reduce or even eliminate your credit card interest costs is to open a new credit card with a 0 percent APR promotional financing offer. The best 0 percent interest credit cards offer introductory periods between 18 and 21 months, though you may have to forgo earning rewards.

Frequently asked questions (FAQs) about living paycheck to paycheck

  • The key is to create additional savings, such as an emergency fund. You can do this via any combination of reducing your monthly expenses and increasing your household income.
  • While there’s no official rule, many personal finance experts agree that you shouldn’t spend more than 30 percent of your gross monthly income on rent.
  • If you can’t make needed budget cuts or find ways to increase your income — such as taking on side hustles or a second job — consult with a financial professional who can help devise a custom plan for you.

    “If you can’t work out a balanced budget, talk with a nonprofit credit counselor who can work with you to review your income, expenses and debts, put together a workable budget and suggest strategies for eliminating debt,” advises Amy Maliga with Take Charge America.