Some good news: Overall, fewer Americans are living paycheck to paycheck.
As of March, the share of adults feeling stretched too thin fell to 60% from 62% in the previous month, according to a new LendingClub report.
Many consumers have scaled back or picked up a side job to help make ends meet in the face of higher prices, other reports show.
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But when broken down by age group, some Americans are still struggling, and millennials most of all.
Nearly three-quarters, or 73%, of adults ages 27 to 42 are living paycheck to paycheck, LendingClub found.
A ‘sandwich generation’ struggle
Millennials, more than any other generation, may face financial obstacles others do not.
“The oldest millennials are in their 40s now and often managing expenses for not just their kids but also aging parents,” said Anuj Nayar, LendingClub’s financial health officer. “It’s no wonder that almost three quarters of them are living paycheck to paycheck.”
A growing number in this group, also referred to as the “sandwich generation,” must financially support both their aging parents and their children.
Gen Z faces ‘financially life-altering events’
Meanwhile, younger adults, in Generation Z, are showing signs of strain.
As of March, 66% of Gen Zers were living paycheck to paycheck — up from 58% a year ago, according to LendingClub. Many in this group are earlier in their careers, which can mean less earning potential and a greater susceptibility to layoffs.
“Generation Z are more apt to face financially life-altering events such as job loss, making them more financially vulnerable than any other generation,” Nayar said.
The oldest millennials are in their 40s now and often managing expenses for not just their kids but also aging parents.Anuj Nayarfinancial health officer at LendingClub
That leaves them more likely to dip into their cash reserves or lean on credit just when interest rates rise at the fastest pace in decades.
“That’s troublesome,” said Tomas Philipson, University of Chicago economist and the former chair of the White House Council of Economic Advisers.
Coming out of the pandemic, many Americans have depleted any extra cash reserves they once accumulated. “We had a long run,” Philipson said. “We are now at the end of that runway.”
Most experts recommend going back to a basic budget — even if that means using the envelope method, or “cash stuffing,” to stay disciplined.
This can help avoid overspending, said CFP Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida.
“Look at how much you have left over after expenses and savings,” she said. “If you have $200 left in the month, that’s the number you can spend, and stick to it.”