Exclusive: Ahead of New Presidential Administration, Paycheck-to-Paycheck Consumers Feel Pinched

Regardless of whether they voted for Trump or for Harris, whether they live in a blue state or a red state, the people living paycheck to paycheck are feeling pinched.

PYMNTS Intelligence has long chronicled the progress and the challenges confronting consumers and households across all income levels who find that there’s little, if anything, left over from take home pay that can meet monthly household and debt obligations.

We’re nearing an all-time high share of consumers who say they live paycheck to paycheck at more than 66% in October of this year, which is up from the 56% who said the same two years ago.

The pressures of living paycheck to paycheck were, not surprisingly, top-of-mind this week as people voted.  PYMNTS Intelligence will be shining a spotlight on its own findings tied to how economic concerns influenced the just-past election cycle soon.

But as the Associated Press noted, as many as 3 in 10 voters said that they felt family finances were “falling behind.”

PYMNTS Intelligence found in research last month that households across all income levels are earmarking their funds for expenses – by and large they aren’t splurging.  That’s true even for lower income-consumers, where only a minority (at 14%) are splurging (vs. 21% for the highest income earners), as can be seen in the chart below, which describes why certain income strata are living paycheck to paycheck.

No matter where you look, roughly a third of households say they are grappling with a large amount of debt, and a significant percentage of consumers are finding that they have “insufficient” funds — a staggering 57% of the lowest-income consumers say this — which implies there’s simply not enough to make impulse buying a reality.  A mid-teens percentage to as much as a quarter of respondents have said that they’d drawn down a significant percentage of savings.

Interestingly, about 16% of the lower-income brackets said they’d lived P2P, so to speak, due to drawing down savings, less than the roughly 22% of high income earners who said the same.

The reality is that households with relatively less take-home pay don’t have as much savings on hand to draw down in the first place.  Our data show that people earning more than $100,000 annually have roughly $15,000 in readily available savings; those making less than $50,000 annually have an average of about $5,300.

Credit, of course, remains a lifeline. Our data show that roughly 83% of all consumers have credit cards. But drill down a bit and there’s a bit of disparity here. 92% of consumers who don’t live paycheck to paycheck have cards in hand.  But the tally of those who don’t have cards and do live paycheck to paycheck moves up to roughly 22%.  Lower-income consumers have an average of just one card; ownership increases to just under three cards for higher-income respondents.

As for the debt load mentioned above, and with a bit more granular detail, more than 40% of households making more than $100,000 living paycheck to paycheck revolve their balances at least occasionally. That designation soars to a full two-thirds of individuals making up to $100,000 living paycheck to paycheck.  The average balance of high-income consumers with issues paying their bills stood at nearly $12,000, compared to below $6,000 for mid and lower-income cohorts.

We found that credit card installment plans have been widely embraced to pay for the most basic necessities, where roughly 47% of consumers used these plans to buy groceries and 44% did so to buy clothes.

Buy Now Pay Later options are showing similar appeal, as seen below:

The increasing popularity of BNPL is evident in separate PYMNTS Intelligence research that showed, headed into the Fall, 26% of those who live paycheck to paycheck with difficulties paying their bills said they were very or extremely likely to use BNPL in the next 12 months.  Only 10% of those who do not live paycheck to paycheck reported that they expected to use BNPL in the next year. BNPL providers have also been expanding their efforts.

In one example, as reported by PYMNTs on Thursday (Nov. 7th), BNPL firm Sunbit has received a $355 million debt warehouse facility.  The new financing, announced Monday (Nov. 4), was led by J.P. Morgan, Mizuho Bank Ltd. and Waterfall Asset Management following a $310 million facility earlier this year with Citi and Ares Management.

The votes are in, the new administration’s on the horizon, and will the paycheck-to-paycheck pressures abate?  The answer is a work in progress.

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