Many Americans’ bank accounts are on life support.
Some 40 percent of consumers were living paycheck-to-paycheck out of necessity in December 2025, according to a recent survey of 2,465 people from financial data and news site PYMNTS. The sheer number of those waiting on their next paycheck to cover expenses signals a troublesome financial reality for many.
Living paycheck to paycheck – using most of a paycheck for necessities with little or no money left over for savings – became more prevalent as the year went on, PYMNTS found. Some 29 percent of consumers entered 2025 barely surviving on their paychecks, and that number jumped 16 percentage points by December.
Those struggles coincided with a tumultuous year for inflation. The country entered 2025 with inflation at 3 percent, which was a full percentage point higher than the target rate the Federal Reserve likes to see.
Inflation plummeted to 2.4 percent in May, but rose to 3 percent again in September and finished the year at 2.7 percent. Inflation reports revealed consumers were paying higher prices than the year before for essentials like rice, bread, eggs, and meat.
By November, those pressures led nearly four in 10 consumers to say they felt “so much worse about their finances” than the previous year, per a consumer confidence survey released in December by the Federal Reserve Bank of New York.
While inflation eased to 2.4 percent in January and February, the Iran war’s impact on oil prices sent inflation soaring to 3.3 percent in March. It was the biggest month-to-month jump in inflation since the rate shot up 1.6 percentage points in April 2021.
As Americans struggle to cover their bills, emergency expenses are a cause for concern. Simply put, the paycheck-to-paycheck life many lead puts them at risk of taking on debt for unexpected costs. And those unexpected costs are likely to be at least $1,000 and pop up once a year, at a minimum, the PYMNTS survey found.
Less than half of consumers – 48.5 percent – are confident or extremely confident they could cover a $1,000 surprise expense without “falling behind on their other bills,” PYMNTS noted.
But it’s not just the big expenses that are putting households at risk. Smaller expenses that pop up are eating away at the financial stability of those trying to make ends meet.
“What stands out in the report is not simply that Americans are under pressure,” the survey noted. “It is that the pressure is becoming more repetitive and more structural. For many households, unexpected expenses keep recurring, making recovery harder each time.”
