At a 40-year high, inflation is making life difficult for everyone, including the country’s wealthiest.
Price hikes on everything from fuel to groceries are burning a hole in every American’s wallet, causing many to cut back on costs and delve into their savings. Even persons with the highest salaries are affected by the economy, even though inflation is disproportionately affecting the poor.
According to a new survey by loan issuer LendingClub and commerce media platform PYMNTS, more than a third of paycheck-to-paycheck consumers in the United States earn at least $250,000, implying that inflation is hurting how Americans of all income levels manage their finances.
“Inflation will almost certainly be a feature of the economic picture for many months to come,” the research states, “and consumers living paycheck to paycheck of all income categories will need to review their financial situations and plan their spending accordingly.”
The study looked at the finances of over 3,000 people from all walks of life in the United States. For the first time in the study’s history, the survey included information on the finances of the country’s wealthiest earners.
“A quarter-million dollars per year is certainly significant income, as it is more than five times the national median. It should come as no surprise that one-third of them live paycheck to paycheck “The Financial Health Officer at LendingClub, Anuj Nayar, stated in a statement. Nayar went on to say that high-income earners’ altered spending patterns were due to their pricey lifestyles.
According to the survey, almost 61.3 percent of Americans (157 million people) live paycheck to paycheck, spending all of their earnings to costs and leaving little to nothing at the end of the month. This is a nine-point increase from the previous year.
However, there are significant variances in how people in various income categories pay their bills, and the report explains that the vast majority of high-income workers who live paycheck to paycheck have no trouble meeting their expenses—only 10% to 12% are having trouble paying their bills.
In contrast to the working class, high-income individuals typically have good credit scores and the ability to pay with credit cards. Only 48% of all paycheck-to-paycheck consumers have made a credit card payment recently.
“[High-income workers] are creditworthy, but they have more financial obligations and are more likely to use their money to finance their lives,” Nayar explained.
For years, the majority of Americans have lived paycheck to paycheck, but inflation has made things even more difficult. Fuel, food, and housing prices are all increasing rapidly, but average pay growth has not kept pace.
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Inflation has also thrown a wrench into what had been shaping up to be a historic financial rebound for most Americans following the outbreak. Most Americans’ finances actually improved during the pandemic as a result of repeated stimulus payouts, more savings, and decreased costs, according to a recent Federal Reserve report.
But that was before Russia’s war of Ukraine brought food and fuel costs skyrocketing, and inflation gripped the lives of most Americans, including the wealthiest.
Inflation and rising costs have become the top drivers of stress for Americans, according to a March survey by the American Psychological Association, with economic stress at historic highs. According to a report published in April by U.S. News & World Report, more than two-thirds of Americans are concerned about their financial future.