More Consumers Than Not Live Paycheck To Paycheck, Report Finds

57% of U.S. consumers said they were living paycheck to paycheck in May 2023, according to a recent report from LendingClub in partnership with PYMNTS. While this figure is stark, it represents a drop from 61% the month prior. It comes as inflation continues to decline after hitting a high of 9.1% in June 2022.

TheStreet’s J.D. Durkin sat down with LendingClub Money Expert Alia Dudum to break down these findings and to discuss her top money management tips.

Full Video Transcript Below:

J.D. DURKIN: The report also finds 57% of consumers are currently living paycheck to paycheck, at least as of the month of May. That figure is down, however, from 61% the month before. What do we think is behind that?

ALIA DUDUM: We think that consumers are adjusting to inflationary pressures, and so they’re able to manage their money. They’re starting to live within their means. That said, wages aren’t keeping pace with inflation. So there’s a lot at play there. But for now, it seems like a lot of consumers are living within their means and able to save a little bit more. And so we aren’t seeing them bridge the gap. And again, living paycheck to paycheck doesn’t necessarily mean that people aren’t able to finance their lives. It just means that they’re bridging the gap. So they are making just enough to pay their bills today and have a little bit, not a ton, left over for savings.

J.D. DURKIN: Alia, there is at least a bit more optimism out there throughout analysts that perhaps we can avoid a pretty bad recession. Right, there’s still some sense that maybe if we do hit a recessionary environment, it might be more mild than previously thought. There’s more confidence that perhaps the Fed can stick this so-called ‘soft landing.’ How does that reality work itself into your expectations on how any of these figures may hopefully be a little bit easier on Americans moving forward, let’s say the back half of 2023?

ALIA DUDUM: Yeah so I mean, what we saw last year in 2022 during the holiday season is in anticipation of inflation, consumers were wanting to spend less during the holiday season knowing that they would spend more for the goods and services that we purchased. And that was a trend that we saw. And I think we’ll continue to see that for this next half of the year. People really are watching their money. They’re making sure that they have enough to pay their bills, that they are able to save a little bit left over. There’s also a lot of unknowns, right? Student loans are going to resume in a few months. And so at the end of the day, we’re going to see a lot of people have to service some of these debt obligations that have been postponed for quite some time. So we’ll see how that plays out.

J.D. DURKIN: Finally, as a money expert, any other top tips for best managing your money, especially given the understandable challenges and the headwinds that a lot of people find themselves in?

Yeah, really, I mean, at the end of the day, it’s really about budgeting. So if you don’t have a budget, start creating one now so that you can accurately understand how much money you have coming in and where everything is going out. If you do feel like there is going to be tough times ahead. Save, save, save now. You can really just do it automatically without thinking about it. Set up those alerts so that it’s automatically withdrawn from your paycheck and just plan. Right? It’s a good opportunity when there isn’t an emergency to look at your coverage, assess what you’re covered for, and make sure that you make any adjustments so that when you’re in an emergency, you’re not going through the process with your providers to understand what you’re covered, what’s covered and what’s not.

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