Paycheck-to-Paycheck Report: Gen Z Consumers Would Struggle Most to Pay $400 Emergency Expense

No one likes surprises when it comes to financial planning, but many people can afford to overcome the unexpected payout more than others. For those living paycheck to paycheck, though, an unexpected expense can send their financial picture into upheaval and increase their stress levels greatly.

Our research finds that paying an emergency expense “can be a significant challenge for all consumers living paycheck to paycheck, especially for those who struggle to pay their bills each month.”

About half of consumers we talked to for the February 2022 edition of “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration, say they would be unable to handle an emergency expense of $400 based on their current financial situations.

That group is led by Generation Z consumers living paycheck to paycheck and having issues paying their bills, of which almost three out of every five respondents (59%) would be unable to afford a $400 emergency expense.

More than half of Generation X consumers who live paycheck to paycheck and struggle to pay their bills (51%) wouldn’t be able to pay a $400 emergency expense, while the same is true for 46% of bridge millennials, 44% of millennials and 42% of baby boomers and seniors who live paycheck to paycheck and have issues paying their bills.

Our data also indicates that consumers who live paycheck to paycheck and struggle with their bills are more likely to sell something, borrow from family members or friends or use a credit card to pay an emergency expense than they are to use money from a checking or savings account.

In the February 2022 edition of New Reality Check: The Paycheck-to-Paycheck Report, a PYMNTS and LendingClub collaboration dubbed The Generational Divide Edition, we examine why consumers across different generations live paycheck to paycheck and what they see as the most prominent stressors on their finances.

The report draws on insights from a survey of 3,070 U.S. consumers conducted from Dec. 2 to Dec. 14, 2021, as well as an analysis of other economic data.

Consumers who live paycheck to paycheck without issues paying bills and those who do not live paycheck to paycheck, however, are much more likely to use funds from their checking or savings accounts to pay an emergency expense of $400.

According to our research, among consumers who live paycheck to paycheck without issues paying bills, close to half of almost all generations would cover emergency expenses with money from their checking or savings accounts.

One-third (34%) of Generation Z consumers who live paycheck to paycheck and do not have issues paying bills would use the money in their checking or savings accounts to pay an emergency expense, making them the least likely to do so.