Why ‘Paycheck to Paycheck’ Doesn’t Always Mean ‘Broke’

When you read the term “paycheck to paycheck,” it can be easy to picture someone white-knuckling it between the first and third Fridays of each month.

While there are a number of people who do fit that description, research by PYMNTS found that the share of consumers who live paycheck to paycheck and still comfortably pay their bills has risen significantly since October 2021, with the largest increase coming from higher-income consumers.

PYMNTS’ research finds continual shifts in the cohort of consumers living paycheck to paycheck. As of January of this year, the share of consumers who do not live paycheck to paycheck fell to 36% in December 2021, down from 39%.

Additionally, the number of people living paycheck to paycheck who are still able to pay their bills increased to 42% in January 2022, climbing from 39% in December 2021. However, 22% of paycheck-to-paycheck consumers still struggled to pay their monthly bills, and the share of paycheck-to-paycheck consumers who have trouble paying their monthly bills has seen little fluctuation.

In January 2022, 47% of consumers who made between $50,000 and $100,000 per year — and 43% of those earning less than $50,000 — reported living paycheck to paycheck without experiencing issues paying their bills. These numbers have risen since October 2021, when the share was 36% for both categories, and then reached 41% and 48%, respectively, in November, before leveling off in early 2022.

PYMNTS’ research shows a large number of high-income people are joining the ranks of those who live paycheck to paycheck, but have no issues paying their bills.

The share of consumers who earn more than $100,000 and live paycheck to paycheck without issues went from 26% in May 2021 to a high of 39% in November 2021, before dipping to 31% the following month and going back to 37% in January 2022.

Finally, our findings show just 12% of consumers who earn more than $100,000 said they live paycheck to paycheck and experienced issues paying their bills in January. This figure is substantially higher among those earning $50,000 to $100,000 per year (19%) and those earning under $50,000 (34%).

For more on how consumers are coping amid a time of rising prices and dwindling buying power, download New Reality Check: The Paycheck-To-Paycheck Report, a PYMNTS and LendingClub collaboration.