Nearly two-thirds of U.S. households now live paycheck to paycheck, squeezed by high costs for essentials and slower wage growth.
Credit card debt has hit a record $1.13 trillion, with more families -- across all income levels -- relying on borrowing to cover monthly expenses.
Many consumers are cutting back spending or using buy-now-pay-later financing, but experts warn these quick fixes can worsen long-term financial instability.
A new report from Goldman Sachs is painting a sobering picture of American household finances: more people than ever are living paycheck to paycheck.
According to the investment bank’s latest consumer survey, rising costs for essentials like housing, food, and transportation are leaving fewer families with savings or a financial cushion.
The study found that nearly two-thirds of U.S. households say they struggle to make ends meet between paydays—a significant increase from last year. Analysts attribute this trend to a combination of sticky inflation, elevated interest rates, and slower wage growth compared to earlier in the pandemic recovery.
While inflation has cooled from the highs of 2022, prices remain well above pre-pandemic levels. Rent, groceries, utilities, and insurance premiums continue to climb steadily, putting pressure on household budgets.
Goldman’s report highlights that even middle-income families earning between $75,000 and $100,000 annually are increasingly reporting financial strain.
‘Stretched thin’
“Many households aren’t in crisis, but they’re stretched thin,” the report states. “The lack of savings and reliance on credit cards to cover monthly bills creates long-term vulnerability.”
Credit card debt has surged to a record $1.13 trillion nationwide, according to Federal Reserve data, with delinquency rates also rising. That suggests more consumers are not only borrowing more but also struggling to keep up with payments.
The study’s authors note that living paycheck to paycheck isn’t confined to low-income families. High earners are increasingly reporting little to no savings buffer, reflecting lifestyle inflation and mounting fixed costs.
Goldman Sachs researchers caution that the trend could ripple through the broader economy. When more families lack disposable income, discretionary spending declines, affecting everything from retail sales to travel and hospitality sectors.
Consumers are adjusting their spending
The report also found that many Americans are adjusting their daily habits to cope. Dining out less, delaying big purchases, and relying on buy-now-pay-later financing are all becoming common strategies.
Yet those coping mechanisms can sometimes worsen financial instability. For example, while buy-now-pay-later services offer short-term relief, missing payments can result in hefty fees and credit score damage.
Similarly, scaling back retirement contributions might help free up cash flow today, but it compromises long-term security.
Financial planners recommend consumers focus on creating emergency funds—even modest ones—and tackling high-interest debt first. Employers are also encouraged to provide financial wellness resources and flexible pay options to help employees manage cash flow more effectively.
How to stay ahead of paycheck-to-paycheck living
Track expenses weekly to spot spending leaks.
Build a modest emergency fund—start with just $500 and grow from there.
Pay down high-interest credit cards before tackling lower-rate loans.
Use automatic transfers to savings, even if only $20 per paycheck.
Negotiate bills where possible (cable, insurance, phone).
Explore employer benefits like earned wage access or financial counseling.