65 percent Paycheck-to-Payc – GuruFocus.com
3 out of 10 earn more $250,000 Continue to Live Paycheck to Paycheck
Nearly 40% of those who earn more $250,000 Citing paying a family member’s expenses as a financial distress factor
SAN FRANCISCO, June 27, 2022 /PRNewswire/ — LendingClub Corporation (NYSE: LC), the parent company of LendingClub Bank, the first U.S. digital marketplace bank, today released findings from the 11e edition of the Reality Check: Paycheck-To-Paycheck Research Series, conducted in partnership with PYMNTS.com. The Financial Distress Factors edition examines the financial lifestyle of American consumers who live paycheck to paycheck, the factors that cause financial distress – life cycle events or life-changing events – and the impact of these financial stressors on their lives.
Key points to remember: 65% of paycheck-to-paycheck consumers have experienced a financially stressful event in the past three years, with sudden disruptions to their income such as losing a job being the most common. Additionally, half of paycheck-to-paycheck consumers say their paycheck only covers basic expenses and is one of the reasons for their financial distress.
“Consumers have struggled in recent years as different factors have affected their financial lifestyle and there appears to be little relief in sight,” said Anuj Nayar, responsible for the financial health of LendingClub. “While the specific nature of the event causing financial distress may vary, it is clear that we all need to be prepared for the unexpected. It is only a matter of time before something happens. happen, even the best-laid financial plans.”
Living paycheck to paycheck means spending your entire salary on expenses with little or nothing at the end of the month, but many of these consumers remain solvent, actively managing their cash flow in real time. Paycheck-to-paycheck consumers fall into two categories: those who can pay their monthly bills easily and those who find it difficult to do so.
The impact of major life events on the life of Paycheck To Paycheck
To understand the drivers of financial distress, this report asked consumers about life-cycle events such as marriage or divorce, the birth of a child, moving and retirement, and life-altering events. financial situation such as job loss, serious illness, disability. , or major unforeseen expenses such as a natural disaster or a lawsuit.
According to the data, more than half of US consumers have experienced a life cycle event or life-changing event in the past three years. Life cycle events, such as marriage or the birth of a child, are the most common events, with 38% of consumers overall having experienced these situations in the past three years. The share climbs to 51% among millennials but drops to 30% among baby boomers and seniors. Life-altering events, such as job loss or serious household illness, have occurred to 33% of all consumers in the past three years.
While low income is cited as a cause of financial distress, paycheck-to-paycheck consumers in high income brackets and large households cite paying a family member’s expenses as a distressing factor. financial. In fact, nearly 40% of paycheck-to-paycheck consumers who earn more than $250,000 say it is a factor at the root of their financial difficulties.
How Paycheck-to-Paycheck consumers save
One in five consumers living paycheck to paycheck have spent more than they have earned in the past six months, those struggling to pay their bills have seen their savings cut in half over the past six months. of the past year. Nearly half of all paycheck-to-paycheck consumers say their paycheck only covers basic expenses and is the source of their financial distress. While many consumers use credit as a financial tool to manage expenses and cash flow during financially difficult events, high-income consumers tend to use it more.
“Setting up an automatic transfer to a savings account, even if it’s a small amount, can help you weather the next storm, because it’s not whether you’ll need cash, but Credit can also be an effective tool to help with expenses during financially distressing events, but those in financial difficulty should exercise caution,” Nayar continued. Credit increases and, if you don’t intend to pay your bills in full every month, you could potentially find yourself in a revolving debt trap. For those looking for relief, consider refinancing a high-interest debt installment loan.”
To see the full report, visit: https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-financial-distress-consumer-savings-credit/
New Reality Check: The Paycheck-To-Paycheck report is based on a census-balanced survey of 3,708 U.S. consumers conducted from May 10 to May 23. The Paycheck-To-Paycheck series draws on existing data published by government agencies such as the Federal Reserve and the Bureau of Labor Statistics to provide an in-depth look at the elements that form the backbone of consumer financial well-being. American: Income, Savings, Debt and Spending Choices. Our sample was balanced to match the US adult population across a set of key demographic variables: 52% of respondents identified as female, 32% had a college education, and 36% reported incomes above $100,000 per year.
LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. LendingClub Bank is the leading digital marketplace bank in the United States, where members can access a wide range of financial products and services designed to help them pay less when they borrow and earn more when they save. Based on over 150 billion cells of data and counting $70 billion in lending, our advanced credit decision and machine learning models are used throughout the customer lifecycle to expand seamless access to credit for our members, while generating compelling risk-adjusted returns for our loan investors. Since 2007, more than 4 million members have joined the Club to help them achieve their financial goals. For more information about LendingClub, visit https://www.lendingclub.com.
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SOURCE LendingClub Corporation