August 4, 2016

Americans Are Not All Living Paycheck to Paycheck

Over at The Simple Dollar they posted an article titled : Instant Gratification: Why 76% of Americans Live Paycheck to Paycheck and How You Can Beat That Cycle with 12 Simple Strategies
That 76% number seemed awfully high.    Way too high.  Unbelievably high.     But there is a survey that claimed that figure of course.   Here is a reference to the survey in a CNN article 76% of Americans are living paycheck-to-paycheck.   They say its an survey from Bankrate.    I found that survey : 76% of Americans Don't Have Enough Emergency Savings and I quote :

"Fewer than one in four Americans (24%) have enough savings to cover at least six months' expenses"
Having less than 6 months expenses is not "living paycheck to paycheck".    6 months of living expenses is actually a pretty healthy emergency fund.    Living paycheck to paycheck would mean you have less than a months expenses in savings.

The Bankrate article goes on to say: "Exactly half have less than three months' expenses saved up, and 27% have no emergency savings whatsoever."

Bankrate also has a page with charts on the topic.    We can find a little more data there.

Their survey found that the breakdown of emergency savings is :

No savings 27%
Less than 3 months 23%
3 to 5 months 21%
6 months or more 24%
no answer 6%

If you've got over a month savings then you're not really living "paycheck to paycheck" in my opinion.   So I'd say that really somewhere between 27% and 50% are  living "paycheck to paycheck".    Its probably more like 40% who really have under a month in savings.   But that doesn't even mean that 40% are living "paycheck to paycheck" since "savings" isn't the only way to have money.     I'm sure there are people with a pile of money in stocks or other assets but with less than a months cash in a savings account.    Such people may just rely on credit cards or other lines of credit for emergency expenses that might exceed a months spending.  

As another data point I also found the Federal Reserve topic Report on the Economic Well-Being of U.S. Households. (full report)   and they said : "When asked if they have set aside an emergency or rainy day fund that would cover three months of expenses, nearly half of respondents (47 percent) indicate that they do."   Which agrees with the Bankrate figure on that matter.


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