In the last three months, 46% of consumers had to pay for at least one unexpected expense, averaging $1,400 each.
You’ve surely seen examples of people whose finances have taken a strong turn for the worse since the covid pandemic began in March 2020.
A consumer finance survey by PYMNTS, a financial news service, and LendingClub, an online loan platform, fleshes out the anecdotes with some numbers.
It shows that 59.3% of Americans were living paycheck to paycheck as of July, up from 54% a year earlier. Even among those earning more than $100,000 per year, 43% are living paycheck to paycheck, up from 34% in July 2021.
Also, in the last 90 days, 46% of consumers had to pay for at least one unexpected expense. And those expenses averaged $1,400 a pop.
Car repairs are the most common unexpected expense, accounting for 30% of the incidents, with each one averaging $1,008. Healthcare expenses were second at 21%, with an average cost of $1,361 per incident. House-related expenses placed third at 19%, with an average cost of $2,042.
Plenty of Debt
The survey found that 52% of consumers used cash or money in their accounts to pay for unexpected expenses, and 23% used their credit cards but paid the balance in full at the end of the month.
However, 37% used financing alternatives to cover at least part of these expenses, with 18% using a credit card and carrying a balance.
“As living costs continue to rise, making ends meet can be a challenge for consumers of all income brackets, never mind putting aside savings,” the survey said.
“As a result, fielding an emergency or unexpected expense can create pronounced financial stress, especially among paycheck-to-paycheck consumers with issues paying monthly bills and those earning less than $50,000 a year.”
Meanwhile, a recent report from New York Life found that as inflation drives the cost of living higher, American adults report drawing an average of $616.73 a month from their savings to cover higher everyday costs.
Inflation, Healthcare, Economy
The survey found that 65% of consumers are concerned about inflation, 34% about healthcare costs, and 32% about economic recovery. A total of 89% are worried that a recession will arise soon.
When it comes to financial concerns, 39% are worried about groceries and gas, 36% about monthly bills and 24% about personal financial emergencies, such as healthcare.
Further, 64% are confident their retirement savings will last their whole lives, down from 74%
in January 2022.
Meanwhile, a recent report from Morningstar offers seven tips for financial success.
1. Prioritize your savings,
2. As inflation soars, ask for financial help,
3. Make your billing dates work with your personal financial lifestyle,
4. Don’t discount the power of discount shopping,
5. Spend mindfully,
6. Ask yourself about your financial goals, make it meaningful, and don’t forget about retirement,
7. Afford yourself options in the future.
