(TheProudRepublic.com) – Underscoring the difficulties of living in the current economic climate of the United States, a significant majority of adults are confronting financial constraints, particularly as the holiday season approaches.
According to a recent report by LendingClub, a staggering 60% of adults in the U.S. are experiencing the strain of living from one paycheck to the next as of October.
This phenomenon is not confined to lower-income brackets; a notable 42% of individuals earning six-figure salaries are also grappling with this challenge under the current administration of Joe Biden.
The data further highlights a growing financial distress among the populace, marking an increase from 58% in March, as reported by a separate survey from CNBC. This trend reflects a broader economic uncertainty that has led approximately 40% of consumers to perceive their financial situation as deteriorating compared to the previous year.
The LendingClub report also uncovers that over a third of consumers consider tapping into their savings to accommodate holiday expenditures. This decision, while offering a temporary solution, could potentially leave them exposed to unforeseen financial emergencies.
Alia Dudum, a financial expert at LendingClub, expresses concern about this behavior, noting that while individuals have found ways to cope with inflation, their reliance on savings and a willingness to exceed budgets for holiday purchases might make them susceptible to unexpected fiscal crises.
Furthermore, 43% of consumers who barely manage to pay their bills and live paycheck to paycheck are contemplating using credit to finance their holiday shopping. This tendency towards what Jacqueline Howard, head of money wellness at Ally Financial Services, terms “hyper-consumption” stems from a lack of mindfulness in spending. Howard advises a more thoughtful approach to expenditures, prioritizing financial well-being.
Amid these challenges, credit card debt in the U.S. has surpassed $1 trillion. A survey by TD Bank reveals a concerning trend: an overwhelming 96% of shoppers anticipate exceeding their holiday budgets. Matt Boss, Head of Consumer Products at TD Bank, suggests that strategic planning and adherence to a set budget can alleviate some of the financial stress associated with holiday shopping.
Interestingly, the report notes that Generation Z has a higher propensity for budgeting during the holiday season. About 81% of Gen-Zers are considering devising a holiday budget this year, compared to 77% of Millennials and only 59% of Baby Boomers. Additionally, 66% of Gen Z individuals are proactive in setting aside money throughout the year in anticipation of higher holiday spending, demonstrating a more disciplined approach to financial planning.