66% of Generation Z Live Paycheck to Paycheck,
Up Eight Percentage Points Year-Over-Year
Report Reveals Significant Generational
Differences in How the Rising Cost of Living Impacts Consumers'
Financial Lifestyles
SAN
FRANCISCO, April 28, 2023 /PRNewswire/ -- LendingClub
Corporation (NYSE: LC), the parent company of LendingClub Bank,
America's leading digital marketplace bank, today released findings
from the 21st edition of the New Reality Check: The
Paycheck-to-Paycheck research series, conducted in partnership with
PYMNTS. The Generational Deep Dive Edition examines why U.S.
consumers across all generations are living paycheck to paycheck
and identifies the financial stressors they face due to ongoing
inflation.
Today's Paycheck to Paycheck Landscape
Sixty percent of consumers lived paycheck to paycheck as of
March 2023, with less than one-third
of these consumers struggling to pay their monthly bills. This
represents a drop from 62% in February
2023, and from 64% at this time last year, suggesting that
consumers continue to find ways to adapt to ongoing inflationary
pressures.
Fewer paycheck-to-paycheck consumers report struggling to pay
bills: 18% of paycheck-to-paycheck consumers reported struggling to
pay bills in March 2023, and this
share represents drops of 6 percentage points from last year and 9
percentage points since 2020. Meanwhile, the share of consumers
living paycheck to paycheck without issues paying bills sat at 43%
as of March 2023, up from 40% last
year. This relative success is not limited to paycheck-to-paycheck
living, as the share of consumers not living paycheck-to-paycheck
also increased from 36% in March 2022
to 40% this year.
Furthermore, significantly fewer low-income consumers report
they live paycheck to paycheck compared to last year, but the share
among higher income brackets remains relatively steady. For
example, lower-income consumers (those earning less than
$50,000 annually) dropped from 82% in
March 2022 to 75% as of March 2023, middle-income consumers (those
earning between $50,000 and
$100,000) increased from 63% in
March 2022 to 65% in March 2023, and high-income consumers (those
earning more than $100,000 annually)
remained steady at 49% year-over-year.
Different Financial Stressors Across Generations
Similarly with income brackets, there are significant
differences in financial lifestyle among various age groups,
suggesting that stage of life influences consumers living paycheck
to paycheck. Millennials are the generation most likely to live
paycheck to paycheck, with 73% doing so this year and last, but a
growing share of Generation Z are struggling financially.
Millennials tend to be mid-career and the most prevalent reasons
for their financial distress are expenses related to dependent
family members and debt. Meanwhile, as of March 2023, 66% of Generation Z lived paycheck to
paycheck — an increase of 8 percentage points since March 2022. Many of these consumers are still
establishing their careers, which can mean lower wages, are more
apt to be single, live with their parents or siblings and may be
more likely to spend on discretionary categories like dining out,
entertainment, clothing and electronics while living paycheck to
paycheck. Additionally, 50% of baby boomers and seniors lived
paycheck to paycheck in March 2023,
down from 54% this time last year. This suggests that this age
group, many of whom are retired and live on a fixed income, have
adjusted their spending to cope with inflation.
While older generations face fewer financial stressors due to
the absence of life-cycle frictions, 62% of all consumers
experienced a financially distressing event in the last three
years. In fact, 74% of Generation Z and 72% of millennials report
experiencing at least one financially distressing event.
Life-altering events, which are sudden and disruptive and include
failed investments or a job loss, are equally as likely to occur as
life-cycle events, such as marriage or relocation. For example,
Generation Z are the most likely to have experienced a job loss
personally or within the household, while millennials are more
likely to experience family changes or relocation.
"The oldest millennials are in their forties now and often
managing expenses for not just their kids but also aging parents.
It's no wonder that almost three quarters of them are living
paycheck to paycheck," said Anuj
Nayar, Financial Health Officer at LendingClub. "Generation
Z are more apt to face financially life-altering events such as job
loss, making them more financially vulnerable than any other
generation. That said, with over half living with their parents or
siblings, they can hopefully better absorb shocks to any temporary
disruption in income. The data also indicate that Gen Z are often
not saddled with the financial obligations of older generations,
and it shows in the way they manage their money to clearly
prioritize living in the moment."
Generational Differences in Credit Product Usage
Four out of 10 millennials and Generation Z are paying off their
credit card balances with an installment payment plan, compared to
one-tenth of baby boomers and seniors. In fact, Generation Z credit
cardholders are nearly five times more likely than baby boomers and
seniors to have credit card installment plans to pay off their
outstanding balances.
Mortgages and auto loans have the highest usage among Generation
X, at 43% and 39% respectively. Personal loans and buy now, pay
later plans are most popular among millennials, with approximately
20% having payments related to these credit products in the last
three months, while Generation Z are more apt to use credit cards
than any other credit products.
"While consumers continue to find ways to cope with inflation,
the ongoing rise in the cost of living and financial distress from
life-altering and life-cycle events continue to make it difficult
for all income brackets to make ends meet," continued Nayar. "All
generations that live paycheck to paycheck are learning to better
manage their finances through recessions, financial crises and
unexpected life events such as job losses."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-generational-differences-credit-products/
Methodology
New Reality Check: The Paycheck-to-Paycheck Report — The
Generational Deep Dive Edition is based on a census-balanced survey
of 3,363 U.S. consumers conducted from March
8 to March 17, as well as analysis of other economic data.
The Paycheck-to-Paycheck series expands on existing data published
by government agencies, such as the Federal Reserve System and the
Bureau of Labor Statistics, to provide a deep look into the core
elements of American consumers' financial wellness: income,
savings, debt and spending choices. Our sample was balanced to
match the U.S. adult population in a set of key demographic
variables: 51% of respondents identified as female, 31% were
college-educated and 36% declared incomes of more than $100,000 per year.
About LendingClub
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 U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$85 billion in loans, our advanced
credit decisioning and machine-learning models are used across 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 4.7 million members have
joined the Club to help reach their financial goals. For more
information about LendingClub, visit
https://www.lendingclub.com.
CONTACT:
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
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SOURCE LendingClub Corporation