Living Paycheck to Paycheck: Definition, Statistics, How To Stop

James Britton CFP, CLU, EPC profile photo

James Britton CFP, CLU, EPC

Financial Planner
Britton Wealth Management and Planning Consultants Inc.
Fax : 866-202-2935

Paycheck to paycheck is an expression describing an individual who would be unable to meet financial obligations if unemployed. Those living paycheck to paycheck predominantly devote their salaries to expenses. Living paycheck to paycheck may also mean living with limited or no savings and refer to people at greater financial risk if suddenly unemployed than individuals who have amassed a cushion of savings.




  • Paycheck to paycheck is an informal expression describing one's inability to pay for living expenses due to the loss of income or inability to budget.
  • People living paycheck to paycheck are sometimes referred to as the working poor.
  • Living paycheck to paycheck can occur at all different income levels.
  • The working poor are often low-wage earners with limited skills but can include those with advanced degrees and skills.
  • Many Americans live paycheck to paycheck because the cost of living has not increased in proportion to salaries.

Understanding Paycheck to Paycheck

Persons living paycheck to paycheck are often referred to as the working poor; however, that may not accurately describe the full scope of this phenomenon as it cuts across multiple income levels.

The proverbial "working poor" have been described as typically having limited skills and are paid low wages. Despite this perception, individuals living paycheck to paycheck can have advanced degrees in highly technical fields. However, mitigating factors, such as industry downturns, and limited success in securing regular employment commensurate with their skills, contribute to living paycheck to paycheck. 

Individuals who live paycheck to paycheck are more likely to work multiple jobs to generate enough income to meet their regular living expenses. Individuals with high-paying jobs who are part of the upper-middle and middle class may also be in a similar situation if outgoing expenses equal (or even exceed) their incoming salary.

More Americans are living paycheck to paycheck than before the pandemic, and the number keeps rising. In January 2022, about two-thirds (64%) of consumers reported living paycheck to paycheck.1

Paycheck to Paycheck and the Pandemic

In February 2021, 41.5% of those unemployed had been without jobs for over half a year, and long-term unemployment totaled 4.1 million Americans, according to a Pew Research Center analysis of government data.23 And 63% of Americans reported that they were living paycheck to paycheck since the pandemic, according to Highland Solution, an information technology company. The worst news? Slightly half of the survey's respondents were not living paycheck to paycheck until the pandemic hit.4

The pandemic threw light on the economic struggles and inequities in the U.S. that forced millions of Americans, including middle and upper-middle-class workers, to live paycheck to paycheck without adequate savings.5

However, the struggle of living paycheck to paycheck was a problem for millions of Americans even before the pandemic. In 2019, 59% of adults in the U.S. were living paycheck to paycheck, according to Charles Schwab's 2019 Modern Wealth Index Survey.6

Paycheck to Paycheck Trend Escalates

Due to various contributing factors, a growing number of full-time workers in the United States have indicated they live paycheck to paycheck, and the trend continues to escalate. One factor contributing to this trend is that while salaries have not increased enough over the years to keep up with the cost of living. In fact, data show that "real" wages have been almost flat for over 40 years now.7

Furthermore, personal debt levels incurred by student loans, rising childcare costs, and credit cards continue to increase, even for individuals earning salaries over $100,000.8 Hence, more Americans are adding part-time work and "side hustles" in addition to their full-time jobs to increase their income—or become effectively full-time workers in the gig economy if they are able to make more money that way. While individuals are often advised to track their expenses to control their spending better and to set budget limits, this accounts for the rate of inflation as it affects the cost of necessities and shelter versus the income opportunities available to workers.

According to data from Experian, in the third quarter of 2021, U.S. consumer debt balances increased by 5.4%, to  $15.31 trillion—a $772 billion increase from 2020.9 That’s more than double the 2.7% increase from 2019 through 2020. One reason for increasing debt loads: mortgages and auto loans experienced the fastest year-over-year growth of any debt category. Consumers who purchased homes and autos had to take out much larger loans to finance them. This growth of debt, stagnant wages, the pandemic, and early 2021's food inflation (caused in part by the pandemic) may mean higher bills for daily food necessities, like milk and meat. All of these factors, unfortunately, contribute to more Americans living paycheck to paycheck.10

If you are trying to stop living paycheck to paycheck, try tracking all your expenses (large and small) on a spreadsheet or free app to find ways to cut costs and save money.

Special Considerations

Personal accountability can play a role in balancing one's budget to avoid living paycheck to paycheck, and it allows for the possibility of savings. Regular expenses can include services and items based on one's lifestyle, rather than just for necessities. Such lifestyle-driven expenses may be perceived as luxuries, which calls into question the budgeting practices of the individual. If personal spending habits escalate in addition to ongoing price inflation, then the possibility for the individual to break the paycheck-to-paycheck cycle diminishes if not becomes unattainable. Even with substantial increases in income, if personal spending rises, the pattern may continue.

Of course, for millions of Americans, avoiding living paycheck to paycheck is not as simple as balancing a budget or forgoing luxuries. Consumer debt, low and stagnant wages, student loans, an increase in the cost of food, and the high cost of childcare are just some of the factors that contribute to living without a financial cushion. The economic impact of the pandemic increased the number of Americans getting by paycheck to paycheck. Still, as the economy recovers from it, there may be more opportunities for Americans to break the paycheck-to-paycheck cycle.11

How Many Americans Live Paycheck to Paycheck?

It may be impossible to know the exact number, but the percentage of consumers living paycheck to paycheck has risen steadily since April 2021, hitting 64% in January 2022. That is 12 percentage points higher than the previous April.1

How Can I Stop Living Paycheck to Paycheck?

Making and keeping a budget, paying down your debt, and use any windfalls like a tax refund, inheritance, or bonus for a savings cushion. Getting a job with a higher salary or working extra hours or a side gig could also help.

How Much of Your Paycheck Should Go to Rent?

The conventional rule is no more than 30% of your paycheck, but that rule may be outdated. If you are trying to save money, you may want to spend less than 30% or base the percentage on your net income (take-home pay) rather than your gross income. How much rent you can also afford often depends on where you live and how much money you earn.12

Article Sources:

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  1. LendingClub. “48 Percent of Americans with Annual Incomes over $100,000 Live Paycheck to Paycheck, 9 percentage points higher than first reported in June 2021.”
  2. Pew Research Center. "Long-Term Unemployment Has Risen Sharply in the U.S. Amid the Pandemic, Especially Among Asian Americans."
  3. Pew Research Center. “COVID-19 Pandemic Pinches Finances of America’s Lower- and Middle-Income Families.”
  4. Highland Technologies. "Survey Reveals Spending Habits During COVID-19."
  5. NPR. "Paycheck-To-Paycheck Nation: Why Even Americans With Higher Income Struggle With Bills." Accessed May 5, 2021.
  6. Charles Schwab. “2019 Modern Wealth Survey,” Accessed May 5, 2021.
  7. Pew Research Center. "For Most U.S. Workers Real Wages Have Barely Budged for Decades."
  8. NPR. "Paycheck-To-Paycheck Nation: Why Even Americans With Higher Income Struggle With Bills."
  9. Experian. “Consumer Debt Continued to Grow in 2021 Amid Economic Uncertainty.”
  10. NBC News. "Get Ready for a Higher Grocery Bills for the Rest of the Year."
  11. CNBC. "A Year After the Pandemic Struck, the U.S. Economy is Still Struggling but Coming Around Quickly."
  12. U.S. Housing and Urban Development/Hud User/PD&R Edge. "Rental Burdens: Rethinking Affordability Measures."

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James Britton CFP, CLU, EPC profile photo

James Britton CFP, CLU, EPC

Financial Planner
Britton Wealth Management and Planning Consultants Inc.
Fax : 866-202-2935