'Loosening up the reins': Over a third of Americans earning $200,000 a year or more say they're living paycheck to paycheck — here's why they splurge instead of save

Mo' money, mo' problems

Millennials tend to have higher incomes, however, they’re also more likely to be living paycheck to paycheck. This generation is grappling with a rising cost of living and housing costs — but also other expenses that make building a savings cushion more difficult.

Around 22% of high-income earners reported family expenses as the main reason they live paycheck to paycheck, while 15% cite nonessential spending as their primary pain point.

The PYMNTS report also finds high earners’ budgets can be “as inflexible” as low earners simply because the former group tends to have more fixed expenses. Education costs have eaten up a significant chunk of their income — with hefty student loans adding to their debt.

And they’re 53% more likely than the average respondent to report paying for an asset outside of their primary home.

Invest in real estate without the headache of being a landlord

Imagine owning a portfolio of thousands of well-managed single family rentals or a collection of cutting-edge industrial warehouses. You can now gain access to a $1B portfolio of income-producing real estate assets designed to deliver long-term growth from the comforts of your couch.

The best part? You don’t have to be a millionaire and can start investing in minutes.

Learn More

Less pressure to save for emergencies

The problem may also stem from improper budgeting and lifestyle creep — the report shows high earners are more likely to spend on things like clothing, fitness and social activities.

Plus, these high earners tend to be more confident about their employment prospects and are less likely to switch jobs, which could mean they’re not as concerned about an unexpected loss in income.

“Perhaps operating from this position of strength makes the delayed gratification of savings seem less important,” the report states.

In fact, the share of high-income consumers who cut back on non-essentials in the last year due to price increases declined since August 2023. The researchers say this group could be less conservative with their spending since inflationary pressures have lessened over time — instead of using this opportunity to build their savings.

Why it’s so important to save (regardless of income)

One of the biggest hurdles high earners say is blocking them from consistent saving is unexpected expenses, as well as one-time or unusually large expenses.

But having an emergency fund is key to preparing for these costs and keeping you from relying on the next paycheck to make ends meet. Experts generally recommend setting aside three to six months' worth of living expenses.

Finance personality Suze Orman is a big proponent of automating your savings to build consistency and prevent you from falling behind on your financial goals in favor of discretionary purchases.

You can also consider putting your savings into a high-yield savings account. These accounts typically charge fees, but may offer much higher interest rates than a traditional savings account would, generating more money from your savings.

More: What is a same-day pay?