A quarter of U.S. households live paycheck to paycheck, analysis finds

Dwelling “paycheck to paycheck” is a phrase typically used time period to explain households which are below monetary pressure. However what does it actually imply, and the way many individuals discover themselves depleting their paychecks shortly after incomes them?

Financial institution of America Institute defines residing paycheck to paycheck as a households “the place necessity spending is greater than 95% of their family earnings, leaving them comparatively little left over for ‘good to have’ discretionary spending or saving.” to be residing paycheck to paycheck. 

“Many of those spending pressures are possible unavoidable, as they relate to household and housing prices,” Financial institution of America Institute senior economist David Tinsley informed CBS MoneyWatch. 

In a Financial institution of America Institute survey of customers within the third quarter of 2025, roughly half mentioned they thought of themselves to be residing paycheck to paycheck.

Financial institution of America Institute additionally checked out its personal clients’ spending patterns to find out that near one-quarter of People truly dwell paycheck to paycheck, with most of their month-to-month earnings going straight towards necessities. 

“The share of households which are residing paycheck to paycheck has been rising barely over the previous few years, which isn’t terribly shocking, as a result of costs have risen for lots of important items — groceries are dearer, the price of automotive insurance coverage is up, and little one care is up, too,” Tinsley mentioned.

Greater earnings, larger housing prices

Whereas lower-income households have a better share of people that dwell paycheck to paycheck, some households which are larger up on the earnings ladder additionally fall into the identical class. 

Round 35% of households with incomes beneath $50K a 12 months reside paycheck to paycheck, up from 32% in 2019, in response to inner Financial institution of America knowledge. In the meantime, about 20% of households incomes $150,000 reside paycheck to paycheck, in response to Financial institution of America Institute’s findings. That is largely as a result of they’ve excessive, mounted housing prices, in response to Tinsley.

“Individuals with larger incomes are likely to have high-priced houses, and plenty of can have giant month-to-month mortgage funds. So it is completely attainable somebody with a excessive earnings might have a variety of it swallowed up by necessities,” he mentioned.

Arduous cycle to interrupt out of

It is financially straining to dwell paycheck to paycheck. “It is often considered a nasty factor, that provides stress and is detrimental to an individual’s sense of monetary well-being,” Tinsley mentioned. 

It is a onerous cycle to interrupt out of, too. Housing prices, which are sometimes a family’s best expense, might be onerous to attenuate. 

“For most individuals, they cannot do a lot about the place they dwell and the way a lot they pay for his or her residence, if they’ve children at a college in a selected neighborhood,” Tinsley mentioned. “Loads of these prices are sticky, and there is not a lot to do about it.”

Within the longterm, such households find yourself with little in financial savings, and are uncovered to monetary shocks.

“If there have been one other inflation shock, or a sharper downturn to economic system than anticipated and a few individuals lose jobs, then individuals residing paycheck to paycheck are most instantly pressured to make sharp reductions in spending to stability the books,” Tinsely mentioned. “And that impacts the general economic system.”