About 24% of U.S. households are living paycheck to paycheck, according to an analysis from the Bank of America Institute. The analysis comes from internal data from millions of customers, using a broad definition of necessity spending that includes housing, gasoline, groceries, utilities, internet service, public transportation, and childcare.
1 in 4 households in America are living to paycheck to paycheck. That is 24% of households spending more than 95% of their income on just essentials. That figure is up 0.3% points from 2024, though the pace of growth is nearly three times slower than last year.
PYMNTS also reported, based on a December survey of 2,986 U.S. consumers, inflation and higher bills have forced many people to adjust their financial habits. By the fourth quarter of 2024, inflation had reached 2.9% by December, and 65% of consumers reported living paycheck to paycheck. While inflation rates varied, 78% said their bills had increased, most commonly for electricity, insurance, and gas.
An economy that eats pay-checks
As essential expenses rose, many households were forced to prioritize spending and stretch already thin disposable income. Insufficient income was the primary reason for living paycheck to paycheck for 35% of consumers, with high debt levels and family financial obligations further adding to financial instability.
A Credit Karma survey of more than 1,000 U.S. adults found that the most common financial regrets in 2025 were not saving enough at 38%, emotional or impulse spending at 28%, and carrying too much credit card debt at 21%. That sentiment aligns with the continued rise in total credit card debt across the U.S., suggesting regret is following spending rather than preventing it.
These pressures are unfolding against a turbulent economic backdrop. The past year included President Donald Trump’s tariff agenda, a record-length government shutdown, federal reserve cuts, and rising unemployment. The findings point toward a K-shaped economy, where higher-income households continue to fare far better than those at the bottom. “Higher income and lower income households are living in two different worlds,” Joe Wadford, an economist at the Bank of America Institute, told CNN.
Signs of financial strain are also evident in household safety nets. 73% of Americans said they are now saving less for emergencies due to rising prices and elevated interest rates.
Together, the data suggests many households are not cutting back by choice, but because the economy is steadily absorbing nearly every dollar they earn.
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