20% of people making 0,000 a year live paycheck to paycheck

20% of people making $250,000 a year live paycheck to paycheck

Low-wage workers aren’t the only group of Americans who regularly spend most or all of their paychecks.

A greater share of Americans who make more than $250,000 a year spend whatever they get, compared to workers who make less than $100,000, according to a new analysis from the Bank of America Institute.

To be sure, people who truly live “paycheck-to-paycheck” tend to be lower on the income ladder, the company said. But the findings also show that a significant proportion of workers at all income levels regularly spend their entire income – or more.

“In any given income bracket, there’s a smattering of people who look like they’re financially pretty stretched in terms of spending relative to their income,” David Tinsley, senior economist for the Bank of America Institute, told CBS MoneyWatch.

Defining “paycheck-to-paycheck”

Bank of America economists used anonymized customer data to look at customers’ deposit accounts in the first quarter of 2022, tapping into cash inflows, such as earnings and other deposits, as well as outflows, such as credit card payments.

When people’s income increases, consumption often exceeds income and other deposits, the institute found. In fact, about 20% of BofA customers with annual incomes of more than $250,000 spent 15% above what they deposit in their accounts, according to the report. In comparison, 17% of customers earning between $50,000 and $100,000 tend to spend more each month than they have come in.

“Those on lower incomes are likely to be most challenged by rising inflation and economic uncertainty,” the report said. “But when we dig into the data we find that there are small but significant groups living ‘paycheck to paycheck’ even at higher income levels, and indeed across the age spectrum.”


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The bank notes that living paycheck-to-paycheck doesn’t necessarily mean someone can barely afford necessities like food and gas. Rather defined, it can also mean that a person simply spends the lion’s share of his income on ordinary expenses.

Meanwhile, the analysis only looks at account activity over a single quarter, and it also doesn’t account for workers expecting big bonuses coming at the end of the year. Higher-income clients can also pay for a mortgage on a house or put a portion of their earnings into brokerage or investment accounts, Tinsley noted.

“You have people sending money into brokerage accounts or people paying off their mortgages, so you could be on $250,000 and have borrowed a lot of money to afford real estate, and that would definitely push your expenses very close to your income,” Tinsley said .

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