Tuesday, 27 February, 2024

Living Paycheck to Paycheck


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LendingClub Corporation, the parent company of LendingClub Bank, America’s leading digital marketplace bank, released findings from its second  Reality Check: Paycheck-To-Paycheck research series, conducted in partnership with PYMNTS.

The key takeaway: In every region within the United States, Americans are living paycheck to paycheck, with certain regions faring better than others.

According to the research, nearly 59% of all consumers in the South-Central region (Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Tennessee, and Kentucky) of America live paycheck to paycheck (compared to 54% nationally), with 25% of respondents living there struggling to pay their monthly bills. South Central residents are also 20% more likely to live paycheck to paycheck and 22% more likely to have trouble paying their monthly expenses than Mountain residents. Americans living in the Northeast states (Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, Vermont, New Hampshire, Massachusetts, and Maine) are also living paycheck to paycheck at a higher-than-average rate (nearly 56%), with 23% of respondents struggling to pay their monthly bills.

Those living in the Northeast and South Central are more cash strapped than most:

  • 45% of consumers earning more than $100,000 in the Northeast live paycheck to paycheck, compared to 40% nationally, with 19% of them struggling to pay their monthly bills.
  • 71% and 69& of millennials living in the South Central and the Northeast regions, respectively, live paycheck to paycheck.
  • Older “Bridge” millennials—consumers born between 1978 and 1988—living in the Northeast region of the United States are 20% likelier to be living paycheck to paycheck than those in the Mountain states.

On the other end of the spectrum are the Mountain states (New Mexico, Arizona, Nevada, Utah, Colorado, Wyoming, Idaho, and Montana), where consumers are the least likely to live paycheck to paycheck. Mountain State residents are also tied with residents in South Atlantic states (Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia, Washington, D.C., Maryland, and Delaware) as being the second-least likely consumers to have trouble paying their monthly bills. Though, it’s worth noting that the financial lifestyle gap is largest in the Mountain region, where low earners are 150% more likely than high earners to be caught in the paycheck cycle.

Americans Living in Urban Areas are More Likely to Live Paycheck to Paycheck

The cost of living in metropolitan areas tends to be higher than in rural areas, making it difficult for many consumers to pay their bills. According to the research, 63% of all consumers residing in metropolitan areas live paycheck to paycheck which is 24% higher than in rural areas.

The South Central and the South Atlantic regions are exceptions to this rule, where consumers living in rural areas within these regions are more likely to live paycheck to paycheck than such consumers living in towns and cities, as 58% and 59% of each region’s rural residents do so, respectively. In comparison, 52% of metropolitan residents in the South Central and 51% of town residents in the South Atlantic live paycheck to paycheck. Even so, consumers living in rural areas in the South Central and South Atlantic are 16% and 7% less likely, respectively, to be living paycheck to paycheck than those living in major metropolitan areas across the country.

“No region of the United States is immune to falling into the paycheck-to-paycheck cycle, and no single defining factor determines who will and will not ultimately become immersed in it,” said Anuj Nayar, Financial Health Officer at LendingClub. “There is a clear need for the financial industry to step up and provide products and services that help all Americans effectively manage their cash flow so they can plan and save for their futures, no matter where they live.”

Edited by Maryssa Gordon, Senior Editor, Price of Business Digital Network

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