A recent survey has shown that 74% of full-time American workers have at least one bill due before their next payday, and 54% admit to feeling tight on cash in the days leading up to their paycheck. This feeling seems to be consistent even for those earning six-figure salaries.
According to a survey released by FinanceBuzz and Wells Fargo in September of this year, 88% of respondents said they eagerly anticipate payday, with nearly a third listing it as one of their favorite days of the month. Similarly, 88% of people celebrate payday in some way, whether by going out to dinner or purchasing something they’ve been wanting.
However, the celebration is short-lived as Americans on average spend 40% of their paycheck within 48 hours of receiving it. Following this spending spree, approximately four days before the next payday, many start feeling the pinch. To make it through this “funding gap,” 51% of people postpone paying essential bills, 43% delay buying groceries, fuel, or medication, and even 50% try to align their bill due dates with their payday.
Of particular note, Chris Lewis, the author of the report and research director at FinanceBuzz, pointed out that financial strain is not solely due to lack of budgeting. Only 29% of respondents cited overspending as a primary factor, while 58% attributed it to rising costs and 53% to unexpected expenses.
Lewis told USA Today, “It’s actually less about overspending than we might imagine. Rising costs, emergency expenditures, and everyday expenses often exceed what most can control, so ‘budgeting better’ is not the answer. What’s truly needed is a buffer for when funds don’t align with life needs, whether it’s a small emergency fund or just a better way to track expenses.”
The survey reveals that the feeling of being financially stretched before payday is more common among those with lower incomes, with 76% of those earning less than $25,000 a year experiencing this, but even among those earning over $100,000, 38% admit to feeling strapped before the next payday.
Another survey by NerdWallet and Harris Poll found that 48% of Americans describe themselves as living paycheck to paycheck, including 38% of households earning over $100,000 a year.
However, NerdWallet notes that the term “living paycheck to paycheck” was not clearly defined in the survey and reflects subjective feelings of the respondents. Among those who consider themselves living paycheck to paycheck, 30% save regularly, 23% contribute to retirement savings, and 15% have an emergency fund, indicating that living paycheck to paycheck doesn’t necessarily imply financial trouble but rather tight budgeting.
In a previous report by CNBC, the case of Adrienne Colman, a physical therapist from Atlanta, Georgia, was highlighted. She accumulated $230,000 in student loans to complete her college and doctoral education, has an outstanding $17,000 auto loan for her 2017 Mazda CX-5, and $2,600 in credit card debt mostly spent on clothing and accessories. Despite the financial burden, Colman stated, “It makes me uncomfortable, but I’m not going to let it deter me from living my life.” She pays $453 monthly for private loans and $229 for federal loans, with the private loan expected to be paid off in 8 years and the federal loan potentially forgiven by the government after 25 years.