Side Gigs Help Ease Paycheck-to-Paycheck Consumers’ Financial Stress This Holiday

In today’s challenging economic climate, many consumers find themselves living paycheck to paycheck and struggling to make ends meet. This is why a significant number of these consumers have turned to supplemental income sources to improve their financial situation.

According to findings detailed in The Supplemental Income Edition of “New Reality Check: The Paycheck-to-Paycheck Report” by PYMNTS Intelligence and LendingClub, half of employed consumers now have supplemental income sources in addition to their regular paychecks. This includes side jobs, other types of supplemental income and active side incomes. In fact, consumers could be amassing a collective $52 billion in cash payments related to active side incomes each month, the research found.

The research indicates that consumers who live paycheck to paycheck have successfully managed cash flow by relying on supplemental income. In fact, while more than 60% of United States consumers lived paycheck to paycheck in February 2023, fewer consumers reported struggling to pay bills compared to previous years. This suggests that consumers have found ways to navigate their lower purchasing power, with supplemental income playing a crucial role.

The report further highlights that paycheck-to-paycheck consumers with supplemental income sources are more likely to have side jobs or engage in other forms of supplementary income. These consumers often turn to side gigs out of necessity, citing the need to pay bills and cover extraordinary expenses. The most common sources of supplemental income for struggling consumers are selling used items and receiving money from friends or relatives.

Against this backdrop, it is evident that supplemental income has a significant impact on the financial stability of struggling consumers. The report reveals that nearly 40% of paycheck-to-paycheck consumers with issues paying bills say their financial standing would seriously deteriorate without this income. Additionally, 22% of consumers living without difficulty paying bills attribute their financial stability to supplemental income.

Moreover, 62% of struggling paycheck-to-paycheck consumers reported their supplemental income representing more of their total monthly income in the 90 days prior to the survey. It is not surprising then that more than half of consumers who have not received supplemental income in the last three months express a likelihood of seeking additional income sources in the next year.

Even more affluent consumers have also embraced the trend, with 27% of high-income and 26% of middle-income consumers saying they have side jobs.

As inflation continues to impact consumers’ purchasing power, reliance on supplemental income is likely to continue to grow. Moreover, with the holiday shopping season’s onset, struggling consumers can count on this extra income to cover the surge in holiday expenditures and in turn ease their financial stress.

This is critical because the holiday season has emerged as the most financially challenging period for a significant number of individuals, according to separate research from PYMNTS Intelligence, with over 20% pointing to vacation costs as a key contributor to their financial stress.

Overall, supplemental income has become increasingly important for struggling paycheck-to-paycheck consumers, many of whom are turning to side jobs and alternative income sources to improve their financial situation as the cost of living rises and financial challenges persist.

PYMNTS Intelligence data suggests that this trend will continue in the future and will be particularly useful for cash-strapped consumers grappling with financial stress as they navigate holiday expenses.