Prices for goods and services will continue to weigh on U.S. consumers' wallets in 2024. Most consumers say they still live paycheck to paycheck. Overall, 62% of consumers were living this way as of January 2024, down from 60% last year. This increase suggests that rising costs of living may be hurting consumer finance, including for high-income earners.
More than one-third of people with annual incomes of $200,000 or more say they live paycheck to paycheck. While rising housing and food costs impact higher-income consumers, other factors, such as non-essential spending, spending on others, and draining savings due to unexpected expenses, especially impact their financial lifestyles. may have an impact. Higher earners' wages are likely not keeping pace with inflation, which may explain their increased discretionary spending. Only 18% of all wage earners say their income keeps up with inflation, compared to 27% of high earners.
These are some of the findings detailed in this edition.New Reality Check: Payroll to Payroll Report,” PYMNTS Intelligence Exclusive report. This issue is “Why one third of high earners live paycheck to paycheck” examines the financial lifestyles of U.S. consumers and the factors that contribute to their financial health. This edition is based on insights from a survey of 4,285 U.S. consumers conducted from January 9 to January 16 and analysis of other economic data.
Other key findings from the report include:
A significant portion of high-income earners live paycheck to paycheck.
The growing number of consumers living this financial lifestyle is evident across all income brackets. The percentage of consumers who engage in this financial lifestyle and earn more than $100,000 a year has increased since January of last year, and now stands at 48%. This share includes 36% of people with annual incomes of $200,000 or more. Millennials tend to have higher incomes, but like urban consumers, they are more likely to live paycheck to paycheck.
The budgets of high-income people are not as flexible as those of low-income people.
Despite rising housing and food costs, wealthier consumers report that essential spending makes up a smaller portion of their budget than lower-income consumers. Discretionary spending on leisure, personal care, and daily transactions represents nearly a third of a high-income consumer's available income. Rising incomes may also lead consumers to spend new types of fixed costs. For example, people at the top of the income distribution are 54% more likely to pay for education.
High-income, paycheck-to-paycheck consumers save inconsistently.
Increasing your income usually increases your savings potential. However, many high-income earners do not save a certain portion of their income. In fact, nearly 1 in 5 consumers with annual incomes above $100,000 have not made any monthly savings in the past quarter. Furthermore, only one in 10 respondents said they do not save money. High-income earners are most likely to say they don't have good savings habits. One possible explanation is that they may have less incentive to save than the average consumer because they are more confident in their job prospects and less likely to change jobs.
As inflationary pressures subside from their July 2022 peak, high-income consumers are rapidly increasing discretionary spending. But even they can benefit from finding ways to budget for essentials and non-essentials in order to live a better life within their means.Download the report to learn about the financial stressors and spending habits that disrupt the lives of high-income consumers From paycheck to paycheck.
