4 ms·

Is this a trend that's going up? It seems like the norm for the past several years (at least) is for a good chunk of Americans to live paycheck-to-paycheck [1]

Is this a trend that's going up? It seems like the norm for the past several years (at least) is for a good chunk of Americans to live paycheck-to-paycheck [1] and not have much of a financial cushion [2]. There's just a lot of precarity out there, whether by choice or by circumstance. [1] https://www.npr.org/2020/12/16/941292021/paycheck-to-paycheck-nation-how-life-in-america-adds-up https://www.npr.org/2020/12/16/941292021/paycheck-to-paychec... [2] https://abcnews.go.com/US/10-americans-struggle-cover-400-emergency-expense-federal/story?id=63253846 https://abcnews.go.com/US/10-americans-struggle-cover-400-em...

gamepsys 3y ago
Have you ever noticed you never see anyone plot the percentage of Americans living paycheck-to-paycheck over time? It's because the number is surprising stable, and always too high.
- westpfelia 3y ago
  citation that it is stable? Considering that pay has been flat since the mid 2000s, mortages/rent has skyrocketed, price of everyday goods has sky rocketed, and the debt bubble is getting bigger and bigger I find it hard to believe that line is flat.
  - gamepsys 3y ago
    2023: 62% of all Americans are living paycheck-to-paycheck https://www.cnbc.com/2023/10/31/62percent-of-americans-still-live-paycheck-to-paycheck-amid-inflation.html https://www.cnbc.com/2023/10/31/62percent-of-americans-still... 2017: 78% of all workers are living paycheck-to-paycheck https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck... 2012: 68% of all Americans are living paycheck-to-paycheck https://www.reuters.com/article/idUSBRE88I1BF/ https://www.reuters.com/article/idUSBRE88I1BF/
adolph 3y ago
What's the point of not living paycheck to paycheck if interest rates are low and inflation relatively high? Holding cash just wastes it. (Note: this is not my personal viewpoint and is not financial advice. It is asked to fairly portray a counterpoint which most people must hold, even if only implicitly.)
- the_snooze 3y ago
  You don't hold it all cash. You stick most of it in investments and let long-term market trends smooth out day-to-day volatility. It's easy enough to cash out non-retirement investments in case you have need for a big expense like a home purchase or riding out longer-duration job loss. For the bit of cash you do hold onto, that's a buffer against random short-term life events: home and car repairs, medical expenses, etc. If you spend all your money down, your life becomes brittle to everyday shocks. Money buys security: you can actually make plans and stick to plans if you have a financial cushion. It's the opposite of precarity.
  - adolph 3y ago
    > stick most of it in investments and let long-term market trends Not liquid, doesn't count for this purpose. > random short-term life events There's always something that requires a chunk of change isn't there? You may as well deal with it using normal cash flow. Anything larger than that gets rolled into a loan because interest rates are low (car, medical repayment plan, etc). > Money buys security In a low interest rate world, that security is very expensive. Shocks that are everyday are by definition no longer shocks but normal business. Deal, defer or finance. Roll initial high interest rate immediate financing into lower rate that takes more time to acquire. Taking off this hat of devil's advocacy or steelmanning the opposite: I think the biggest problem of no cushion is the assumption that interest rates will stay low. People behave in meta-rational ways. Nobody says "I enjoy living by each paystub" but when classical incentives like getting a spiff for saving are not present, savings will not be a salient activity. It might even be better to have a level of unpredictable interest rate variability so that folks by and large learn to exercise a balanced approach of spend|save|invest.
Izkata 3y ago
I think I remember reading this stat used to be fairly stable around 20-30% in 2019 and earlier.

gamepsys 3y ago

Have you ever noticed you never see anyone plot the percentage of Americans living paycheck-to-paycheck over time? It's because the number is surprising stable, and always too high.

westpfelia 3y ago
citation that it is stable? Considering that pay has been flat since the mid 2000s, mortages/rent has skyrocketed, price of everyday goods has sky rocketed, and the debt bubble is getting bigger and bigger I find it hard to believe that line is flat.
- gamepsys 3y ago
  2023: 62% of all Americans are living paycheck-to-paycheck https://www.cnbc.com/2023/10/31/62percent-of-americans-still-live-paycheck-to-paycheck-amid-inflation.html https://www.cnbc.com/2023/10/31/62percent-of-americans-still... 2017: 78% of all workers are living paycheck-to-paycheck https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html https://www.cnbc.com/2017/08/24/most-americans-live-paycheck... 2012: 68% of all Americans are living paycheck-to-paycheck https://www.reuters.com/article/idUSBRE88I1BF/ https://www.reuters.com/article/idUSBRE88I1BF/

adolph 3y ago

What's the point of not living paycheck to paycheck if interest rates are low and inflation relatively high? Holding cash just wastes it. (Note: this is not my personal viewpoint and is not financial advice. It is asked to fairly portray a counterpoint which most people must hold, even if only implicitly.)

the_snooze 3y ago
You don't hold it all cash. You stick most of it in investments and let long-term market trends smooth out day-to-day volatility. It's easy enough to cash out non-retirement investments in case you have need for a big expense like a home purchase or riding out longer-duration job loss. For the bit of cash you do hold onto, that's a buffer against random short-term life events: home and car repairs, medical expenses, etc. If you spend all your money down, your life becomes brittle to everyday shocks. Money buys security: you can actually make plans and stick to plans if you have a financial cushion. It's the opposite of precarity.
- adolph 3y ago
  > stick most of it in investments and let long-term market trends Not liquid, doesn't count for this purpose. > random short-term life events There's always something that requires a chunk of change isn't there? You may as well deal with it using normal cash flow. Anything larger than that gets rolled into a loan because interest rates are low (car, medical repayment plan, etc). > Money buys security In a low interest rate world, that security is very expensive. Shocks that are everyday are by definition no longer shocks but normal business. Deal, defer or finance. Roll initial high interest rate immediate financing into lower rate that takes more time to acquire. Taking off this hat of devil's advocacy or steelmanning the opposite: I think the biggest problem of no cushion is the assumption that interest rates will stay low. People behave in meta-rational ways. Nobody says "I enjoy living by each paystub" but when classical incentives like getting a spiff for saving are not present, savings will not be a salient activity. It might even be better to have a level of unpredictable interest rate variability so that folks by and large learn to exercise a balanced approach of spend|save|invest.

Izkata 3y ago

I think I remember reading this stat used to be fairly stable around 20-30% in 2019 and earlier.