3 Reasons Americans Can’t Stop Living Paycheck to Paycheck

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Do you have little money left after paying your bills? You’re not alone. Check out a few reasons why many Americans are stuck living paycheck to paycheck. 

If you’re currently living paycheck to paycheck, please know that you’re not alone. Many Americans are struggling to afford everyday living costs. A 2023 study by SecureSave found 74% of Ameridans are now living paycheck to paycheck. It can be challenging to reach your financial goals when you have little money left over after paying all your bills.

Keep reading to find out some of the reasons why Americans can’t stop living paycheck to paycheck.

1. Rising living costs

One reason many Americans struggle financially is due to rising living costs. When everyday costs increase, it can have a significant impact on your personal finances.

For many people, housing is their priciest expense. While rental costs have cooled recently, median rental prices nationwide remain high. According to data from Zumper, the national median price for a one-bedroom rental is $1,505, and it’s $1,862 for a two-bedroom rental.

Average mortgage rates have pushed well above 7%, resulting in high housing costs for more recent home buyers. Rising rent and mortgage loan costs can make it difficult to escape the paycheck-to-paycheck lifestyle, especially for those in high-cost-of-living areas.

2. Household debt continues to climb

Another reason Americans continue to live paycheck to paycheck is due to debt. Research from The Ascent found that total household debt in the U.S. continued to climb in 2023. Data from the Federal Reserve Bank of New York shows that household debt reached a record high of $17.1 trillion in the second quarter of 2023.

Credit card debt is a costly debt that many Americans have. The above study also found that Americans had $1 trillion in credit card debt in the second quarter of 2023, up from $986 billion in the first quarter of the year. Credit card interest is expensive and can quickly get out of control. The more your credit card bills climb, the harder it is to get out of debt.

3. Salaries aren’t keeping up with inflation

Many Americans have seen little to no change in their income despite rising living costs. A recent poll from the Associated Press-NORC Center for Public Affairs Research discovered that two-thirds of U.S. adults have experienced rising household expenses over the last year, yet only one in four have seen their income increase.

When you have no choice but to pay more for necessary costs like food, housing, and utilities, it can be challenging to get ahead financially — especially if your income stays the same. Many people continue to fall deeper into debt, which makes their financial situation worsen.

For Americans struggling with rising living costs and salaries that aren’t keeping up with inflation, it may be worthwhile to consider applying for new jobs that offer more pay and better benefits. Another option is to negotiate a salary raise with a current employer. Finally, getting a part-time job or side hustle could allow you to boost your checking account balance.

Small changes can make a big difference

If you feel discouraged about your finances, don’t give up. While you may be struggling now, you can make improvements. Making small changes can make a big difference in the long run.

It’s never too late to make small improvements. Getting a higher-paying job, paying off debt, and reworking your budget are ways to improve your financial situation.

Setting a budget could allow you to reduce your spending to free up extra cash. If you need help budgeting, check out our list of the best budgeting apps. Many of these apps are free to use.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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