Despite all the enthusiastic reports we read these days about the economic recovery, the fact remains that more than half of American households are currently living on paychecks – many of which are making more than $ 100,000 a year. Although recent data from PYMNTS reveals a large gap between different regions, the basic underlying problem is the same – and the most common solutions used to mitigate it involve new digital technologies.
For example, bridge millennials – consumers aged 33 to 43 born between 1978 and 1988 – find themselves in dire financial straits as they enter their peak spending years while taking on student loans, paying off mortgages. important and often supporting children. It’s a situation that leaves nearly a third of this generation (29%) strapped for cash at the end of the week or month, and living paycheck to paycheck.
This problem, the data shows, is somewhat regional – young consumers in the Northeast who face a high cost of living are 20% more likely to live on paychecks than those in mountain states. , where the cost of living is lower.
Additionally, the study found that the paycheck-to-paycheck problem is not a generational phenomenon – nearly 59% of South Central consumers live from paycheck to paycheck, and 56% of consumers in the northeast report the same condition. Urban consumers, according to the data, live paycheck to paycheck about 63% of the time, while 51% of rural consumers say the same.
In fact, PYMNTS / Mastercard data from the start of the year reveals how consumers’ work also has a big effect on bottom lines. Among concert workers, 71.5% of workers say they are “salary-awaiting” or “salary-focused”. Prospective workers report that they have savings for emergencies, but their paychecks are consumed by day-to-day expenses, while “pay-centric” workers have no savings at all, but are on the back burner. less able to meet expenses as long as they are paid. .
But as PYMNTS data also shows, consumers facing issues of instability and uncertainty in their financial lives are looking for solutions to both close the gap and better manage their money to overcome the issues they face. are faced.
Looking to speed up the process
Instant pay has become an increasingly sought-after offering with workers who argue that two-week pay is a relic of the past and no longer relevant in the context of modern payments. This shifting payment preference is particularly noticeable in the concert worker segment.
According to data from PYMNTS / Mastercard, getting paid faster is of interest to more than 84% of workers who live on paychecks and 66% of those who don’t. In fact, the idea is so compelling to the former that more than a third would consider switching to the concert platforms that offer them. Among paycheck workers with no emergency savings, 53.4% said they would use salary advances to cover bills and expenses. However, research also shows that 50.8% of paycheck-dependent concert workers believe that an advanced payment option would reduce money stress, while around 40% said it could help. cover the cost of work-related supplies.
Payout speed isn’t the only one uphill workers are looking for. They are also increasingly looking for better bill payment options, for the sake of speed and immediacy. Specifically, they want the ability to navigate to a single portal that helps them “understand [their] overall financial situation, not just how to pay a particular bill ”, BillGO SVP Russ chacon told PYMNTS in a recent discussion.
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“Providing a more engaging and comprehensive bill payment experience goes directly to all of these things,” noted Chacon. “Everyone realizes that it is essential to help the bank or FinTech to develop this customer relationship and the income associated with it. Staying still is not an option.
Rethinking financial well-being
Young consumers under financial pressure who live paycheck to paycheck are increasingly looking to better control their spending to avoid going into debt, data from PYMNTS also showed earlier this month. Credit cards are becoming less and less attractive, as the bonus of increasing one’s purchasing power is increasingly outweighed by the fear of falling into a hard-to-break debt trap – even among consumers who are otherwise “Worry-free” when it comes to meeting their financial needs. obligations.
According to PYMNTS data, 64% of consumers who mostly prefer a leading BNPL program believe that BNPL providers are more trustworthy service providers than banks or credit card companies. Overall, 48% of BNPL users agree with the statement that “BNPL providers are more reliable service providers than banks or credit card companies”.
Consumers, even the growing proportion across the United States who are feeling the lure of the paycheck life, are not quite willing to resign themselves to the problem – and are increasingly looking for technologies that allow them to. control when they get paid and how they pay.