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More than half of all Americans are living paycheck to paycheck, according to a new report

Photo illustration of a millenial woman sitting on a couch and staring at a receipt with papers, a calculator, and a laptop spread out on a coffee table in front of her.
More than half of American consumers are living paycheck to paycheck, with millennials feeling added pressure.
Photo illustration by Fortune; Original photo by Getty Images

Rising costs have impacted nearly every sector of the economy, from deposit account APYs to credit card APRs, the price of consumer goods, and more. And many Americans are struggling to cover their basic expenses. The March Consumer Price Index (CPI) signaled a 0.1% rise in the inflation rate, up 5.0% from the same period last year, according to the Labor Department.

An April report by and LendingClub highlighted the pressure that rising prices have put on average consumers. The data showed that 60% of United States consumers lived paycheck to paycheck as of March 2023. 

“One of the key reasons for this phenomenon is the high cost of living, which includes housing, health care, and education expenses,” says  Lucas Noble, a financial advisor and founder of Noble Financial Group. “Additionally, many Americans are burdened with debt, such as student loans and credit card debt, making saving money difficult.”

The March Consumer Price Index (CPI) signaled a 0.1% rise in the inflation rate, up 5.0% from the same period last year, according to the Labor Department. This was an improvement from the previous month, but still puts a strain on many Americans.

The number of Americans living paycheck to paycheck varies by generation 

The report found that out of all generations surveyed, millennials were the most likely to be living paycheck to paycheck with 73% currently doing so. That’s compared to just 66% of Gen Z consumers and 50% of baby boomers and seniors. Data from the U.S. Census Bureau shows that the median millennial household income was $77,338 in 2021. 

“Millennials are struggling with the paycheck-to-paycheck cycle for various reasons, such as stagnant wages, high levels of student loan debt, and the rising cost of living,” says Noble. He also notes that millennials don’t just struggle to cover immediate expenses—they also fall behind when it comes to building long-term wealth. 

According to the Federal Reserve’s 2019 Survey of Consumer Finances, millennials have an average net worth roughly between $76,000 and $436,000. That’s compared to members of Generation X who have average net worths between $400,000 and $833,000, and older generations including baby boomers and members of the Silent Generation who have average net worths of over $1 million.

Breaking out of the paycheck-to-paycheck cycle 

Living paycheck to paycheck can be incredibly stressful when it seems like you’re paying more for the same goods and services and your salary hasn’t increased to match those higher costs. It can be difficult to find the balance between covering your basic expenses and having enough left over for any surprise expenses or other financial obligations. 

What’s more: Living paycheck to paycheck can lead to increased levels of debt and stress. If you only have enough money in your bank account to last until your next paycheck, even the smallest unforeseen expense could send you into a debt spiral. Experts say that even so, there are ways to get back on track and give yourself some financial breathing room. 

  1. Revisit your budget and make adjustments wherever necessary. When you’re living paycheck to paycheck, freeing up any amount of money is a start. Comb through your most recent bank statements to determine where you have the room to cut back on expenses and put more toward your savings account or emergency fund. 
  2. If you don’t have an emergency fund, it’s time to create one. An emergency fund should be separate from the savings account you put money into for future money goals. Your emergency fund should be reserved for unforeseen expenses, medical bills, living expenses if you’re laid off, and so forth. Experts say you should have three to six months worth of regular expenses stashed away, although if you have a bigger family, you might aim to save a bit more. 
  3. Say “no” to new debt. The more you borrow, the more you’ll owe in monthly debt payments. And in a paycheck-to-paycheck cycle, there’s no room for additional expenses. Rather than taking on new debt, applying for new credit cards, or falling into a lifestyle inflation trap, focus on eliminating your existing debt balances. Paying off debt will free up any money you usually use to make minimum payments. You could start with your smallest balances if small wins give you the motivation to keep going, or prioritize larger balances to have the greatest impact. 
  4. Look for ways to boost your income. This can be easier said than done, but not completely out of the realm of possibility. The easiest way to break this cycle is to look for ways to increase your income while you’re actively looking for ways to reduce your expenses. Start by having a conversation with your boss about a salary increase if you’re due for one or have taken on new responsibilities that warrant a pay bump. If the answer is “no, not right now,” other ways to increase your monthly income could include a side hustle or establishing a passive income stream like investing in dividend stocks, renting out a piece of your property, and more. 

The takeaway 

If it seems like your dollars aren’t going as far these days, it’s not in your head. Higher costs are making it more challenging for Americans to cover their basic expenses. Still, by carefully following a budget, looking for ways to reduce costs, and getting creative when it comes to earning more income, you can make the days between each paycheck less daunting.

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