Over a third of Americans making more than $250,000 a year say they spend paycheck to paycheck, highlighting how inflation is wreaking havoc on Americans’ finances. According to a survey by industry journal Pymnts.com and LendingClub Corp., 36 per cent of households earning nearly four times the typical US salary spend virtually all of their money on household expenses.
It’s particularly true among Millenials, who are now in their mid-20s to early 40s: More than half of top earners in that generation report having little left at the end of the month.
According to US Census Bureau data, the $250,000+ income category typically represents the top 5% of earners in the country. Living paycheck to paycheck isn’t always a sign of hardship, and LendingClub distinguishes between individuals who can easily pay their payments and those who can’t. According to the poll, only about one in ten high earners reported having trouble covering all of their family expenses in April.
During the pandemic, housing costs, which generally consume a major portion of wealthier people’s budgets, have risen dramatically. According to Zillow Group Inc. data, a top-tier home in Orange County, California, cost $1.7 million in April, up from $1.2 million in February 2020. A mortgage on that house would cost roughly $100,000 per year, assuming a 20% down payment. That’s 40% of a $250,000 pre-tax annual income.
Top incomes, even those battling to make ends meet, are obviously in a much better position than the rest of the country, which is seeing rising prices for everything from food to gas and electricity.
The LendingClub’s data suggests that 61.3 per cent of all consumers surveyed claimed they were living paycheck to paycheck in April, up 9 percentage points from a year ago.
Higher-income families are more likely to use credit cards to fund their lifestyles, but they are also more likely to be able to pay off their bills in full. Consumer borrowing in the United States increased to its highest level on record in March, as credit card balances increased and non-revolving credit increased, highlighting the combined impact of strong spending and rising prices.
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