Many Americans eagerly await their payday. According to a report by LendingClub, as of June, 61% of adults in the United States are living paycheck to paycheck. This means that they rely solely on their regular paychecks to cover essential living expenses, with little to no money left over.
A survey conducted by Bankrate reveals that 72% of Americans feel financially insecure given their current financial circumstances, with more than a quarter believing they will never achieve financial security. “There are actually millions of people struggling,” says Ida Rademacher, vice president at the Aspen Institute. “It’s not something that people want to talk about, but if you find yourself in a situation where your financial security feels extremely precarious, you are not alone.”
This struggle is not a recent phenomenon. In 2010, Principal Financial Group discovered that 75% of workers were concerned about their financial futures. Additionally, a 2015 Economic Policy Institute report highlighted that wages for the bottom 90% of earners had only grown by 15% since 1979, compared to a staggering 138% increase for the top 1%. However, with the current higher inflation rates and rising interest rates, there is renewed attention on the anxiety experienced by wage-earners.
More from Personal Finance:
Americans believe they need a salary of $233,000 and nearly $1.3 million for retirement
Why Americans are facing difficulties with car loans
Majority of parents spend 20% or more of household income on child care
Based on the latest data from the U.S. Bureau of Labor Statistics, the typical worker takes home $3,308 per month after taxes and benefits. However, when considering the cost of essential expenses nowadays, it is evident why consumers feel financially strained.
According to Redfin, the median monthly rent in the U.S. was $2,029 in June. This amount already accounts for approximately 61% of the median take-home pay.
In the first quarter of 2023, the Council for Community and Economic Research reported that the median mortgage payment for a 2,400-square-foot house was $1,957 per month, which is equivalent to about 59% of the median take-home pay.
“Inflation is significantly impacting individuals’ housing stability,” explains Kamila Elliott, a certified financial planner and co-founder/CEO of Collective Wealth Partners in Atlanta. Elliott, who is a member of CNBC’s Financial Advisor Council, adds, “If you have uncertainty regarding your housing situation, it creates uncertainty in every aspect of your life.”
Combining these expenses with the average amount Americans spend on food ($690.75 per month) and out-of-pocket health expenditures ($96.42 per month), the total monthly expenses for renters amount to $2,816.17 and for homeowners, $2,744.17. These figures already account for over 85% of the median take-home pay for the average American renter and almost 83% for an average homeowner. This calculation excludes other essential expenses such as transportation, childcare, and debt payments.
“So much of managing your financial life in America today is like drinking from a firehose that many households are not able to show up and impose a framework of their own design onto their finances,” points out Rademacher. “Many are still in this reactionary space where they’re just trying to figure out how to make ends meet.”
Watch the video to gain further insights into why achieving financial security seems nearly impossible in the United States today.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
