The percentage of Americans’ paycheck-to-paycheck lives surged in 2022

Months of high inflation weighed heavily on household budgets.

A recent LendingClub report found that as of December, 64% of Americans were living paycheck to paycheck, up from 61% a year ago and hitting an all-time high in March 2020. hits.

For the first time, more than half of all six-figure earners said they were too thin. This is a significant increase from 42% a year ago.

“The impact of inflation is eating into every American’s wallet, and as the Fed’s efforts to curb inflation drive up the cost of debt, record numbers of Americans are living paycheck-to-paycheck. ” said Anuj Nayar, LendingClub’s head of financial health.

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The Federal Reserve (Fed) is widely expected to announce its eighth consecutive rate hike at this week’s policy meeting.

Wage growth is strong by historical standards but has not kept up with the 6.5% year-on-year increase in the cost of living in December.

At a time when interest rates are rising at their fastest pace in decades, many Americans are in a pinch as inflation and rising prices force more people to deplete their cash reserves or rely on credit. is standing in

Other reports also show that financial well-being is deteriorating across the board.

Certified Financial Planner Ted Jenkin, CEO and Founder of oXYGen Financial in Atlanta and member of CNBC’s Council of Financial Advisors, offers the best advice to spend less and make better use of your savings. .

Jenkin says a few simple financial hacks can help, like going to the grocery store less often and shopping less online.

“The grocery store is just like Las Vegas. They’re there to disconnect you from your wallet.” Meal planning is one way to save money by compiling your shopping list into weekly essentials. am.

Disabling one-click ordering or deleting stored credit card information may also help. “People who shop on Amazon and save their credit cards are basically lightening their budgets,” says Jenkin.

Jenkin recommends waiting 24 hours before making an online purchase, then using a price tracking browser extension like CamelCamelCamel or Keepa to find the lowest price.

Finally, tap into a savings tool like Cently, which automatically applies coupon codes to your online orders, and pay with a cashback card like the Citi Double Cash Card. Now you can earn 2%.

“You really have to be disciplined or you’ll end up exceeding your income,” he said.

The money you save should also benefit you, he said.

Deposit rates are rising, but even high-yield savings accounts aren’t enough to meet the rising cost of living.

Jenkin recommends buying short-term, relatively risk-free government bonds and laddering them to ensure you get the best interest rates.

“It’s not a big return, but you’re not losing money,” he said.

Another option is to buy Federal I bonds, inflation-protected, almost risk-free assets.

The I-Bond is currently paying 6.89% annual interest on new purchases through April, from the 9.62% annual rate offered from May to October 2022.

Still, it works well as a hedge against inflation for long-term savers. The downside is that I bonds he cannot redeem for one year. Also, if you cash out within 5 years, you’ll be paying interest for his last 3 months.

LendingClub’s Paycheck to Paycheck report is based on a December survey of approximately 4,000 US adults.

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