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The Shocking Percentage of Americans that Live Paycheck-to-Paycheck

Last updated by on June 22, 2016

Have you ever wondered what percent of Americans live paycheck-to-paycheck?

The answer to that question can be found buried within the most recent “Financial Capability in the United States” report, produced by the FINRA Investor Education Foundation (as a side note, if you like personal finance and cultural data, the report is a great read).

In a nationwide online study of 25,000 American adults,

“Just over two-fifths of respondents (41%) report spending less than their income, 36% spend about equal to their income, and 19% spend more than their income.”

Americans living paycheck to paycheckIn other words, 55% of Americans are living paycheck-to-paycheck (and these are the folks who have online access, which one would assume are better off than those who don’t). Actually, that’s inaccurate. 36% are living paycheck-to-paycheck, 19% are actually worse off than that – accruing debt.


That means that about 6-in-10 people you pass walking down the street (as they enter clothing stores and bars) are saving absolutely nothing or worse.

And only 35% are “certain they could come up with the full $2,000” if an unexpected need for $2,000 came up within the next month (similarly, 40% claimed to have set aside 3 months or more in an emergency savings fund).

At the same time (ironically),

  • 73% of Americans have positive perceptions of their own financial knowledge and math skills.
  • Only 31% are “not satisfied with their personal financial condition.”

In other words, despite spending everything, most think they are financial gurus! “Everything is fine. Nothing to see here…”

Is this pathological denial or ignorance?

People (of the United States) – I want to be clear about something here: spending everything you earn (and then some) is NOT GOOD.

Sadly, it’s one of the pre-dominant financial memes out there because “spend less than you earn” is often taken as  “spend almost everything you earn”. It’s easy to prescribe, easy to follow, and universally understood.

It’s also a recipe for disaster.

What happens when you consistently live paycheck-to-paycheck?

  • You go into serious debt if income stops coming in, and then you pay high interest on that debt
  • You are always stressed out about financial risk and hardship
  • You aren’t able to build sufficient emergency savings
  • You will never save anything for retirement and will be working until death
  • You will never achieve financial independence
  • You will not be able to save up for an occasional vacation, home improvement, education, etc.
  • You really can’t work towards ANY future goals that are reliant on saved assets

Earning more does not cure all.

It doesn’t have to be this way.

Granted, those in the very lowest income brackets are not going to be able to save much, if anything (no matter what McDonald’s PR firm tries to sell us).

But the median US household income is $51,324. Outside of West and East coast metros, anything nearing this level of income should be adequate enough to provide a level of savings for most individuals and small families.

Everything is not OK. Stop the madness!

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Lauren says:

    I am proud to say we no longer will be living pay check to paycheck. As of last week, we paid off all credit card debt and no can save $1200/month for emergencies. Before we could always save some to take vacations but not build a nest egg. And I have always maxed out my 401k benefits so I will have an enjoyable retirement. I am a spendaholic though, so after I set aside my savings, I do tend to spend down the rest of my paycheck before the next payday. But we are very excited to no longer be in this staggering statistic. 🙂

  • Kevin says:

    Surprised? Not really. Society says spend, spend, spend.

    Luckily, my fiancé and I aren’t in that category any more. We’re not completely debt free, but we’ve made headway with our finances. We’re no longer using credit card A to pay for credit card B. Have two emergency funds that are growing and saving for bigger purchases. Baby steps.

    Thanks for your posts!

  • Steve says:

    That statistic is crazy! I cannot imagine living paycheck to paycheck, I’d be a complete mess and constantly stressed out. Like you mentioned though, my friends and coworkers who do live paycheck to paycheck have an amazing ability to either truly not fear the situation they are in, or present themselves as if they don’t.

    One of my friends told me “I’m young, I figure I’ll enjoy my life for two years and start saving after that.” I tried to tell him “You don’t need to live paycheck to paycheck to enjoy your life.” But he just nodded agreeably and changed the subject.

    Another tried to convince me that “If I save my money, I’m just going to lose it to inflation anyway. I should get the most out of my money now!” “You can offset inflation through investments and it isn’t really a reason to not–” “Yea. Hey where are we going for lunch?” *facepalm*

  • Ron Ablang says:

    I’ve always wondered this myself. Thankfully, I’ve always been in the 1st category, the 41% of us who spend less than what we earn. It’s a great way to stay out of debt but you can’t compare yourself to the Joneses.

  • Kristen says:

    I am new to your blog and been spending a bit of time reading through your archives. I appreciate your point of view, especially right now I am relating to this post. I recently got into a bit of debt paying for my fathers burial services, and right afterward I totaled a car and had to spend 60% of my savings replacing that. I am now struggling with having to use my tax returns to pay cc debt when usually I can put that into my savings account.

  • Steve says:

    This doesn’t surprise me. I’d argue that most people, in every single country, prefer instant gratification even if it makes them uncomfortable later. How else do you explain our rising obesity rates? Citizens who routinely vote in politicians who routinely kick the rising debt down the road?

  • Luis says:

    Not really surprised with the percentage of people who are content. I remember as someone who worked part-time while in college, I always considered myself to be frugal since I was comparing myself to friends and family who would spend beyond their means. It wasn’t until I got my first full time job(with about 2000 dollars in debt) that I realize that being a bargain hunter its not the same thing. Its more like a crappy medium as you aren’t saving anything yet you feel constrained by your alleged frugality.

  • says:

    This is shocking! We wonder why people resist changes to the social security system so vehemently. If that is the primary retirement vehicle for many Americans (especially those plunging into debt or living paycheck to paycheck) then we better not mess with it. This type of saving is crippling our ability to make sweeping changes to something that needs them so desperately. Time to get off the hamster wheel.

  • This really does not surprise me. In fact, a year ago I was in the living paycheck to paycheck group. I still have a long way to go, but I did hit my first step in the right direction, when I stopped the cycle of living paycheck to paycheck.

  • Tommy D says:

    It feels like we live paycheck to paycheck only because we use everything that is left over to pay off student loans (we currently contribute enough to our 401k to get the company match). We treat our loan payment as instant 6.675% return on investment. When that is paid off, we plan to max out 401k’s and Roths. With a few more raises in the future, we hope to not live paycheck to paycheck anymore. It is important to note that our only other debt is our mortgage and credit cards are paid off in full every month.

  • Allison says:

    Because I am a NERD, and I’m taking my second statistics class right now, I decided to construct a confidence interval for the number of American adults who spend more than their income in this study.

    First, I investigated the study you mentioned to try to find how they got their data. The National Financial Capability Study (NFCS) didn’t mention whether randomization was used in their study in any way, but they did state that they had a “representative sample” from each of the 50 states and Washington D.C. So assuming that they had a representative sample, that the responses were independent, that the sample size was less than 10% of the population of American adults (this is certainly true), and that there were at least 10 successes and failures in the sample (also obviously true – 19% of 25,509 is much larger than 10), it is appropriate to construct a one proportion z interval.

    So I went through the mechanics of the calculation for a 95% confidence interval, and I’m sure you will be thrilled (hehe) to know that the margin of error for this interval is only about 0.5% (the very large sample size results in a smaller margin of error). This means that we can be 95% confident that the TRUE proportion of all American adults who spend more than their income falls within this range: 18.52% to 19.48%.

    I’m sure you were dying to know. 😛


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