What Does Living Paycheck to Paycheck Mean for Consumers?

If you do an online search for “living paycheck to paycheck”, you’ll quickly find there is not a consistent definition. Some say it means being unable to meet financial obligations if they were unemployed. Others say it means spending all of your income on monthly living expenses – like rent or mortgage, utilities, groceries and transportation – with little to no money left over each month. And, still others say it means basically having zero in checking or savings at the end of each month. 

Financial obligations and living expenses are subjective — which means figuring out who is actually living paycheck to paycheck is subjective as well. For instance, a recent survey from PYMNTS found that “nearly half of consumers earning north of $100,000 annually say they are living paycheck to paycheck.” That seems hard to follow. 

More broadly, according to CNBC and SurveyMonkey’s recent Your Money International Financial Security Survey (which polled 498 U.S. adults), 65% of U.S. consumers are living paycheck to paycheck. A 2023 Forbes Advisor survey (which surveyed 3,000 “general population Americans”) found approximately 40% say their income covers their expenses without anything left over. 

MX’s own survey data (which looks at 1,000+ U.S. adults) shows the answer to both defining paycheck to paycheck and living it is somewhere in the middle… 

Defining Paycheck to Paycheck

Only 21% of consumers said it meant being unable to pay their monthly bills without that next paycheck. More often, it’s about being able to add to (or build) savings and funds for retirement. Here’s how consumers break down the definition: 

• 32% Able to pay bills each month but cannot add to my savings or retirement
• 21% No savings set aside
• 21% Unable to pay my monthly bills without my next paycheck
• 9% Savings amount is too small
• 8% Able to pay bills and contribute to retirement funds each month but cannot add to my savings
• 8% Not able to build additional wealth during a typical month

Living Paycheck to Paycheck

When asked if they are living paycheck to paycheck according to the definition they selected, 55% of consumers said yes. But, keep in mind that this is based on their definition. Let’s dive into this a bit deeper. Here’s what we see when we peel back the layers: 

How consumers define living paycheck to paycheck mirrors their reality. The percentage of those who answered yes to this question almost entirely match the same percentages for each definition:

Who is living paycheck to paycheck varies across ages, incomes, ethnicities, and gender. Our research shows those most likely to consider themselves living paycheck to paycheck are women, single, middle age, low income, etc.  

Want to learn more about the current state of consumer finances? Read the full report: https://www.mx.com/research/driving-engagement-for-consumers-research/