Also analyzing its own customer spending patterns, the financial research firm determined that close to one-quarter of Americans actually live paycheck to paycheck, with most of their monthly income going straight toward essentials.
In the Bank of America surveys, the share of consumers who said they lived from paycheck to paycheck has gradually risen, from about 35% in early 2022 to 47% in the third quarter of 2024.
The authors of the analysis define people who live paycheck to paycheck as those who dedicate more than 95% of their household income to necessities, which include gasoline, food, utilities, internet, public transportation, child care and housing costs.
Among those with salaries and other income totaling $75,000 to $100,000, 23% are just scraping by, up from 19% in 2019. For those earning $101,000 to $150,000, 22% are spending nearly all their money on basics, up from 18%.
Only 18% of individual Americans make more than $100,000 a year, according to 2023 data from careers website Zippia. About 34% of U.S. households earn more than $100,000 a year, according to Zippia.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year.
Of all U.S. adults surveyed, 18% said the largest emergency expense they could handle right now using only savings was under $100. What's even scarier? Only 14% said they could handle an expense of $100 to $499 and only 10% said they could handle an expense of $500 to $999.
High credit utilization ratio: A lack of savings may result in putting big expenses on a credit card. This can raise your credit utilization ratio, a factor that impacts your credit score. Late or missed payments: Depending on each paycheck to pay your bills may lead to late or missed payments.
In 2022, about 14.88 million households in the United States had an income of 200,000 U.S. dollars or more a year.
Necessities are 'swallowing up' income
Around 35% of households earning less than $50,000 per year are living paycheck to paycheck, up from 32% in 2019. Higher-income households also report struggling, with around 20% of households with more than $150,000 living paycheck to paycheck, the research found.
According to the Federal Reserve's Survey of Consumer Finances (SCF) for 2022 (the most recent study released publicly), the average savings balance for people ages 64 and younger ranged from $20,540 to $72,520, with median balances ranging from $5,400 to $8,700.
Living below your means is when you spend less than what you make. In other words, you have money left over at the end of the month. You're not living paycheck to paycheck. You're not having to go into more debt to pay for your living expenses.
50% of your net income should go towards living expenses and essentials (Needs), 20% of your net income should go towards debt reduction and savings (Debt Reduction and Savings), and 30% of your net income should go towards discretionary spending (Wants).
The middle class is commonly defined as households earning between two-thirds and double the median income, which is $128,151 in the San Francisco-Oakland-Berkeley, California metro area, the Census Bureau reports. That means middle class households there earn between $85,434 and $256,302 a year.
According to HHS's measurement, a family of four in 2023 would be considered impoverished if their income is $30,000 or lower. Alaska and Hawaii use a slightly different measure due to a higher cost of living in those states. The poverty guideline is $37,500 in Alaska and $34,500 in Hawaii.
The average annual average salary in the U.S. is $63,795. The median annual salary, which is often less skewed by outlying numbers, is $59,384. It's worth noting that average and median salaries vary quite a bit by state.
But if you're aiming for a five-month emergency fund and your essential bills come to $10,000 per month, then you're right on track with a $50,000 balance. Similarly, a savings account is a great place to put money you're stashing away for a near-term goal.
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
According to the U.S. Census Bureau, the median household income in 2022 was $74,580. To reach the upper class in 2024, you'd typically need an income exceeding $153,000 – more than double the national median. Don't Miss: Are you rich?
Regarding net worth, having $1 million in liquid assets often puts you in the 'high net worth' category. But if you want to be considered very high net worth, you might need anywhere from $5 million to $10 million. For those aiming even higher, ultrahigh net worth status could mean having $30 million or more.