Unlike in the classic tune, summertime doesn’t necessarily mean that the living is easy. Just ask the millions of Americans living paycheck to paycheck. Case in point: the August edition of Reality Check: The Paycheck-To-Paycheck Report, a LendingClub collaboration, for which PYMNTS surveyed more than 7,100 U.S. consumers to learn the extent of the problem.
Researchers found a number of important correlations between geography and demography and who is struggling to stretch paychecks to meet expenses, and why. Among the more surprising findings is the number of relatively high-earning millennials and bridge millennials struggling to pay bills, despite often healthy paychecks.
Per the August report, “Many millennials are beginning to make larger expenditures for the first time, whether that means purchasing a car, taking out a mortgage or preparing financially to have children. These are all life-changing events that can be difficult to manage. It follows that millennials would be more likely than all other generations to report living paycheck to paycheck. There are 71 million millennials in the U.S., and 43 million of them live paycheck to paycheck.”
That compares to an average of 49 percent of consumers of all generational groups reporting such issues. “Millennials in South Central and Northeast states are even more cash-strapped than most,” the study adds, noting that 71 percent and 69 percent of millennials living in the South Central and the Northeast regions, respectively, are now living paycheck to paycheck.
A high cost of living associated with the northeast isn’t exactly news — but seeing it laid out in the research sheds an important light on just how far (or not) paychecks go in different regions.
“Residents of the Northeast states are the second-most likely to be living paycheck to paycheck,” per the August study, which finds that 56 percent of consumers living in the Northeast live paycheck to paycheck, “and 23 percent of all consumers living there struggle to pay their monthly bills.”
Meanwhile, Mountain State and South Atlantic state residents are tied as the second-least likely consumers struggling to stretch paychecks paying their monthly bills, with 20 percent of consumers in those areas saying that they struggle to pay their monthly bills.
As the latest Reality Check report also points out, “These variations may seem minor, but they represent wide-reaching divides that have large-scale implications. To put these differences into perspective, our data means that South Central residents are 20 percent more likely to live paycheck to paycheck and 22 percent more likely to have trouble paying their monthly expenses than Mountain residents.”
The upshot of the August report is that high incomes don’t assure an easy go of it — but again, this has much to do with where people are living, not just the expenses they incur.
“Consumers who earn more than $100,000 in annual income — high-income consumers — are considerably less likely than those earning less than $50,000 in annual income — low-income consumers — to be living paycheck to paycheck,” the August study states, but adds that 40 percent “still report living this way. This projects to roughly 32 million consumers throughout the country who earn more than $100,000 per year, but still would not be able to continue paying their monthly bills for long if their paychecks stopped coming in or if they found themselves having to pay an unexpected medical or emergency expense. Eleven million say their finances are so tight that they already struggle to pay their monthly bills.”