Study: More than half of Americans live paycheck-to-paycheck 

On Behalf of | Jan 25, 2025 | Bankruptcy

When someone lives paycheck to paycheck, it means they must spend all of their earnings on necessities each month. Necessities include rent or mortgage payments, utilities, groceries, transportation and similar expenses. The individual has no money left for savings or luxury purchases.

According to one recent study, this is the case for 57% of Americans. Most people are spending all the money they earn, relying on their next paycheck to make ends meet. Any disruption in pay can cause significant financial issues. They don’t even have an emergency savings account to bail them out. 

How this leads to bankruptcy

Living paycheck to paycheck often leads to bankruptcy because people take on debt—such as credit card debt or car loans—based on their income. If they are already spending everything they earn each month, even a small reduction in income—or a brief period with no income at all—can make their debt unaffordable.

For instance, imagine someone loses their job because their company downsizes during a recession. If they can’t find another job almost immediately, they will not be able to pay their bills at the end of the month.

People often think of bankruptcy as a drastic step taken after years of overwhelming debt. In reality, many individuals are just one month away from being in this position. It can happen very quickly.

If you are facing unsustainable levels of debt and want to create financial freedom for your future, be sure to consider bankruptcy and explore all the legal options available to you. It can help to work with an experienced law firm at this time.