A recent study conducted by PYMNTS found that approximately 60% of consumers in the United States are living paycheck-to-paycheck. The main contributing factors to this financial struggle are debt and inflation. The study revealed that one in three individuals cited debt as a primary reason for living paycheck-to-paycheck.
Interestingly, the percentage of respondents living paycheck-to-paycheck has slightly decreased from 64% in 2022 to 60% in December of the same year. Furthermore, the study highlighted a shift in the financial situation of high-income earners, with 51% reporting living paycheck-to-paycheck at the end of 2022, which decreased to 44% throughout 2023. This improvement in financial stability among higher-income individuals has led to increased optimism for the upcoming year, with nearly half of respondents anticipating a better financial situation in 2024.
However, the optimism is not shared among lower-income earners, as only 32% of this group feel positive about their financial prospects for the year ahead. Additionally, the study found that consumers across all income brackets believe that lower interest rates would significantly improve their financial situation.
The study also revealed that the average credit card debt among Americans has increased to $7,931, up from $6,320 in 2022. This rise in credit card debt, coupled with the difficulty many individuals face in making higher credit card payments, has resulted in a higher percentage of credit card delinquencies. In 2023, 8.5% of credit card balances entered delinquency, according to a report from the Federal Bank of New York.
Overall, the study underscores the importance of having a financial strategy in place to navigate high levels of debt and financial stress. Debt consolidation options, such as low-interest personal loans, may provide relief for individuals looking to break free from the paycheck-to-paycheck cycle.