Inflation is taking its toll on American’s emergency funds.
The share of workers who say they are living paycheck-to-paycheck has surged among middle- to high-income earners — 63% and 49%, respectively — up from 57% and 38%, respectively, a year ago, according to a survey of almost 4,000 workers released this week by online loan specialist LendingTree. Overall, 65% percent of employed consumers were living paycheck-to-paycheck in September 2022 — up from 60% a year ago.
Millions of Americans face rising prices on essential goods and services such as food and rent as their savings are drying up after a post-pandemic spending splurge. These expenses have caused many to deplete their emergency savings just to make ends meet.
To help retain and attract workers, some major companies are offering “savings programs” and “emergency savings accounts.” There appears to be genuine cause for concern: Only 68% of people said they had $400.00 in emergency cash or its equivalent, according to the most recent survey on the issue by the Federal Reserve, although that figure that has been steadily climbing from 50% in 2013.
Given the economic outlook, workers may have limited options. Living paycheck to paycheck is becoming the norm that many will have to deal with in the short to medium term.