While many Americans are fortunate to have stable employment and sufficient savings, there are millions who don’t have enough cash to pay for unexpected expenses or emergencies. Living paycheck to paycheck is the common term for those who don’t have enough money to pay for future expenses until their next paycheck arrives.

If you’re living paycheck to paycheck or are curious about related statistics, read on to learn about differences by demographic, how living paycheck to paycheck impacts your credit, how to budget in this situation and more.

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Living paycheck to paycheck statistics
  • 63% of U.S. consumers lived paycheck to paycheck in November 2022 (PYMNTS)
  • One-third of U.S. consumers say they aren’t currently saving any money and, of this group, 60% don’t have savings (PYMNTS)
  • 57% 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)

What does living paycheck to paycheck mean?

While there’s no official definition of what living paycheck to paycheck means, the expression most 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.

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 prior to 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.

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 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 then, 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).

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 generation to report not saving and having no savings built up.

According to the data, 14.4 percent of baby boomers and seniors, 18.2 percent Generation X, 20.3 percent of bridge millennials (those born on the cusp of Gen X and millennial), 21.7 percent of millennials and 15.4 percent of Generation Z 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%

Living paycheck to paycheck by gender

There are gender disparities, too. Women are more likely than men (57 percent compared to 54 percent) 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.

Can living paycheck to paycheck impact your credit?

While living paycheck to paycheck doesn’t directly affect one’s credit, it can have several indirect effects. For example, when you don’t have significant savings, large purchases tend to be made using a credit card. Incurring credit card debt can hurt your credit, as well as making late payments. And for those living paycheck to paycheck, late payments are always a concern.

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, the current record-low unemployment rate 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 by 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.