Nearly half of Americans earning more than $100K now report living paycheck to paycheck — here are the consequences

Nearly half of Americans earning more than $100K now report living paycheck to paycheck — here are the consequencesAmericans are still grappling with high inflation — the consumer price index was 8.3% in August — and even the wealthy are teetering on the edge.

About 6-in-10 Americans were living paycheck to paycheck in August, according to a recent report produced by commerce data platform PYMNTS and personal loans website LendingClub.

And even those who earn six-figure incomes are feeling the financial pressure of inflation.

Don’t missA TikToker paid off $17,000 in credit card debt by cash stuffing

Too many Americans are still missing out on cheaper car insurance

Invest your spare change and turn your pennies into a productive portfolio

About 45% of Americans who earn over $100,000 were living paycheck to paycheck as well — compared to 38% who were in the same cycle last year.

There are financial consequences up ahead for the millions of Americans barely have enough cash to meet their basic expenses.

Purchasing power is decreasingAlthough wages have been increasing in general, they haven’t been increasing fast enough to keep up with inflation according to an October report from the Federal Reserve Bank of Dallas.

For a majority of employed workers, the median decline in real wages when factoring in inflation this year is over 8.5% — the biggest pay cut in 25 years, said the researchers. If you’re one of them, this means your purchasing power is being severely eroded.

Nearly three-quarters of respondents in the PYMNTS study noted increases in their monthly bills, and many pointed to the cost of fuel and groceries.

Credit card debt is risingAs Americans struggle to keep up with the ballooning costs of consumer goods, many are turning to credit cards to fill the gap.

Credit card balances climbed by $46 billion in the second quarter of 2022, reported the Federal Reserve Bank of New York in August. This could be continuing to increase as the paycheck to paycheck lifestyle becomes more prevalent.

The PYMNTS study also indicates that 67% of those living paycheck to paycheck without any issues paying bills say that they made credit card payments in the last 90 days — even as a quarter remain unaware of the interest rates.

Read more: How much money do I need to make to be in the top 1%, 5%, and 10% in the US? It might be less than you think

The federal fund rate just got hit with another hike by the central bank in September, which means the interest rates on your outstanding credit card balances are increasing too.

According to the most recent data from LendingTree, the average credit card interest rate in the U.S. has risen to 21.59% — up from 21.40% the previous month.

Savings are dwindlingMany consumers are barely making ends meet — let alone have room at the end of the month to fill up their savings accounts.

The most recent data from the Federal Reserve Bank of St. Louis shows that the U.S. personal savings rate dropped to 3.5% in August, compared to 9.5% from the same time last year. The rate refers to personal savings as the percentage of income left over after you pay taxes and spend money.

And in life insurance company New York Life’s Wealth Watch Survey, respondents said they dipped into their savings just to cover their basic everyday expenses — taking out an average $616.73.

Americans steadily depleting their cash reserves in order to compensate for the effects of inflation is becoming a major concern as experts predict a recession could hit sometime in 2023.

It’s important to have some emergency funds saved up in case of an unexpected financial crisis, such as a job loss or pay cut.

What to read next‘This truck can’t do normal truck things’: YouTube star says towing with Ford’s new electric pickup is a ‘total disaster’ in viral video — but Wall Street still likes these 3 EV stocks

'I just can't wait to get out': Nearly three-quarters of pandemic homebuyers have regrets — here's what you need to know before you put in that offer

'Remarkable reversal': President Biden just (quietly) scaled back student loan forgiveness — and the change could impact up to 1.5M borrowers. Are you one of them?

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Click Here To Get Funded!