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You Won’t Believe How Many Americans Are Living Paycheck To Paycheck

Image source: CNN.com

Image source: CNN.com

Nearly half of American households are just one paycheck away from financial disaster despite D.C. touting an economic recovery, a new survey indicates.

To make matters worse, another survey found that many Americans’ finances have not recovered from the 2008 economic meltdown.

The most disturbing finding from the new data: A full 43 percent of US households would not be able pay their bills if they went one month without a paycheck, The Springleaf Financial Strength Survey found. They are living on the verge of poverty with no savings.

Other findings from Springleaf’s poll of 2,010 US consumers included:

  • 26 percent admitted that they did not save money or rarely save money.
  • 24 percent of those polled acknowledged they have less than $250 left in their bank account at the end of the pay period.
  • 10 percent said they had less than $50 left by the time payday rolls around.
  • 27 percent of respondents with graduate degrees admitted they would have to sell property or borrow money to pay bills if they missed one paycheck.

Nineteen percent said they would not be able to miss a paycheck without borrowing money or selling assets.

For Those Who Desperately Want Out Of The Rat-Race But Need A Steady Stream Of Income

“We were surprised to see that nearly 20 percent of adults don’t have enough of a cushion to last two weeks without a paycheck,” said Springleaf Executive Vice President of Marketing and Analytics Dave Hogan. “What was especially surprising is that this is true across all education and salary levels.”

Americans Living Paycheck to Paycheck

A second poll, The Consumer Sentiment Survey of 1,000 adults from McKinsey & Company, was just as disturbing, and mirrored the Springleaf findings. It indicated that many Americans are worse off economically than they were in 2012. It found:

  • 40 percent of consumers surveyed said they lived paycheck to paycheck, up from 31 percent in 2012.
  • 39 percent of those surveyed are worried about losing their jobs, roughly the same as 2012.
  • 40 percent of American families making less than $75,000 a year admitted that they were cutting back on spending.

The survey also predicted that the spending power of low income consumers will fall by 5 percent by 2020.

“There is no doubt that predicting the vitality and future growth of the American economy is a tricky science,” McKinsey & Company said in a release. “Since the system is so heavily dependent on consumer spending, much depends on the level of confidence Americans have about their jobs, their cash flow, the value of discretionary spending, and the strength of the overall economy. We find … that because inflation-adjusted median household income has dropped over the past few years, consumers are feeling reluctant to increase spending and are instead remaining thrifty.”

Said Springleaf’s Hogan, “We are concerned that so many Americans aren’t willing to take the time to learn the skills they need to make better financial decisions,” said Hogan.  “As money management remains a challenge among consumers, the study serves as an eye opener to just how critical financial education is among today’s adults – and how far we still have to go.”

It looks as if the economic recovery is not occurring for large numbers of Americans. Instead, nearly half the population is struggling to survive.

Do you believe the American economy is recovering? Share your thoughts in the section below:

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9 comments

  1. My wife and I squirreled away enough money (outside of our 401k’s and Roth’s) to keep us in our house with the lights on for about six months, if we were both to lose our jobs. We sleep VERY well at night, knowing that we aren’t immediately screwed if the pay checks were to stop.

  2. the truth for once, not lie the Obuma lies, some months I have to take some guns to the pawn shop for short term loan, to get by, expensive to get back out but you have to do what you have to do.
    this last week both my wife an my self have had bad colds, I get sick days she does not so she lost 2 days pay. we get by
    so when Obuma say we are better off he is full of shi*

  3. Having lived semi-off-grid for several years, I have to agree with many of the points all 3 of you gentlemen made. One must do what is needed for one’s family to survive. Sometimes that calls for ‘financial resources’ to be considered in a different light.

  4. I save about 500 dollars per month on a 40k salary. I was saving more but I recently adopted a dog, which is a pricey endeavor.

    If I were to lose my job tomorrow I could technically survive without unemployment for a year at this point, maybe a bit more if I qualified for unemployment.

    This is in St. Louis though. Cost of living here is ridiculously low.

    I will say this… I know people in town who make a lot more than I do (twice as much in one case), don’t have kids yet, and are still managing to live paycheck-to-paycheck. At that point, it’s not money, it’s bad habits.

    Kids… sure. That’s unpredictable. Kids can just randomly up and impoverish your ass without warning.

    But until then… it’s not hard. When I adopted the dog I looked at my disposable income, checked prices of food, supplies, vet care, etc., and ran the numbers. “This animal will cost me, at most, this amount of money per month on average. Can I afford that? Yes? Great.”

    If you work minimum wage though, I’m not even sure how you’d do it, even here. Minimum wage is below survival rates, even at 60 or 70 hours per week. There’s no security, no paid vacation or sick days (each place also prevents you from working more than 35 hours a week so that they don’t end up having to give you benefits of any sort), so if you get sick, or get injured, or anything…

    Man. That’s just not a good life to have to lead.

  5. The economy is recovering…which is a bad thing for consumers.
    The economy meaning businesses make profits, while poor Bob spent his money at said business to get a certain service, e.g. electric bill, shoes for your son, medicine for his wife, radiator hose for the car.
    If Bob gets paid on Friday but the electric bill was due on Tuesday, he gets another $ 35,- slapped onto his next bill, but the late payment won’t be reported yet because it is late in under 30 days.
    Business gets another 35,- from Bob, economy is blooming.
    Bob gets a little poorer. And has less money in savings, if any.

    When the ‘big boys’ in our government state that our economy is recovering, it is actually a BAD sign for all us Bobs.

    • What are you talking about Al? The economy is not recovering its lie from the government. However if it were it would be a great thing. It means more jobs for the average person!

      Back when the economy was good more people had jobs and life was easier.

      • Of course the economy is recovering. Haven’t you seen the stock market? Recovery has nothing to do with available jobs. The jobs aren’t coming back. Corporations are coming up with better ways to increase profits and decrease expenses. This includes reducing the number of available jobs. Why pay to keep an employee on board when you don’t have to? Most businesses hate having to hire more employees.

    • Also people are going to have to spend on stuff like medicine and electricity regardless of how the economy is doing. What you not rather the economy be doing better so more people have jobs?

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