20% of people earning $250,000 a year live paycheck to paycheck

Low-wage workers aren’t the only group of Americans who regularly spend most or all of their paychecks.

A greater proportion of Americans who earn more than $250,000 a year spend everything they bring in, compared to workers earning less than $100,000, according to a new analysis from the Bank of America Institute.

Granted, people who truly live “paycheck to paycheck” tend to be lower on the income scale, the company said. But the results also show that a significant share of workers at all income levels regularly spend all of their income – or more.

“In any income group, there is a group of people who seem to be quite financially strained in terms of spending relative to their income,” David Tinsley, senior economist at the Bank of America Institute, told CBS MoneyWatch. .

Definition of “paycheck to paycheck”

Bank of America economists leveraged anonymous customer data to examine customer deposit accounts in the first quarter of 2022, focusing on cash inflows, such as income and other deposits, as well as outflows, such as credit card payments.

As people’s income increases, their expenses often exceed income and other deposits, the Institute found. Indeed, about 20% of BofA customers with annual incomes over $250,000 spent 15% more than they deposited in their accounts, according to the report. In comparison, 17% of customers who earn between $50,000 and $100,000 tend to spend more each month than they receive.

“People on low incomes are likely to face the most from rising inflation and economic uncertainty,” the report said. “But as we dig into the data, we find that there are small but significant groups living ‘paycheck’ even at higher income levels, and indeed across the age distribution.”


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The bank notes that living paycheck to paycheck does not necessarily mean someone is barely able to afford basic necessities like food and gasoline. Defined more narrowly, it can also mean that a person simply spends the lion’s share of their income on ordinary expenses.

Meanwhile, the analysis only looks at account activity in a single quarter, and it also doesn’t take into account workers who rely on large bonuses coming in at the end of the year. High-income customers could also pay a mortgage on a home or deposit some of their income in brokerage or investment accounts, Tinsley noted.

“You have people sending money to brokerage accounts or people paying their mortgages, so you could be on $250,000 and borrowed a lot of money to buy property, and that would definitely push up your spending. very close to your earnings,” Tinsley said. .

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