The PYMNTS Intelligence report indicates that 19% of households experienced a decline in their financial lifestyle over the past year, while 7.1% reported an improvement. A significant gap in emergency readiness exists, with scores of 32 for households with worsening finances compared to 64 for those who improved.
Savings levels are a critical factor in financial stability. Only 26% of households with deteriorating finances could cover more than three months of expenses from savings, compared to 46% of stable households and 62% of those who improved.
Unexpected costs are a major pressure point. 28% of households faced an expense of at least $1,200 in the last 90 days. This rate was higher among those living paycheck to paycheck and struggling to pay bills, reaching 34%.
Payment methods vary by financial status. Among struggling households, only 36% used cash or savings for their largest unexpected expense, while 56% of non-paycheck-to-paycheck households did the same. In contrast, 35% of struggling households carried a credit card balance, 27% borrowed from family or friends, and 21% delayed bills.
Other financing options for struggling households included payday loans, cash advances, or overdrafts for 15%, and buy now, pay later (BNPL) services for another 15%.
For those who improved financially, 44% attributed this to higher household income and 32% to income growth outpacing essential costs, while 20% cited lower housing costs.
