Low-wage workers aren’t the only group of Americans who regularly spend most or all of their paychecks.
A larger proportion of Americans who make more than $250,000 annually spend everything they bring in, compared to workers making less than $100,000, according to a new analysis from the Bank of America Institute.
To be sure, people who truly live paycheck to paycheck tend to be lower down the income ladder, the company said. But the results also show that a significant proportion of workers at all income levels spend all of their income—or more—on a regular basis.
“In every income bracket, there’s a band of people who look like they’re pretty financially stretched in terms of their spending relative to their income,” David Tinsley, senior economist at the Bank of America Institute, told CBS MoneyWatch.
Bank of America economists tapped into anonymized customer data to examine customers’ deposit accounts in the first quarter of 2022, focusing on cash inflows, such as income and other deposits, and outflows, such as credit card payments.
As people’s incomes increase, their expenses often exceed income and other deposits, the institute found. According to the report, about 20% of BofA customers with annual incomes greater than $250,000 were spending 15% more than what they put into their accounts. In comparison, 17% of customers who make between $50,000 and $100,000 spend more than they make each month.
“Those with lower incomes are likely to be most challenged by rising inflation and economic uncertainty,” the report said. “But when we dive into the data, we find that there are small but significant groups that live paycheck to paycheck, even at higher income levels, across the age distribution.”
The notes that living from paycheck to paycheck doesn’t necessarily mean someone can barely afford basic necessities like groceries and gas. More narrowly defined, it can also mean that a person simply spends the lion’s share of their income on ordinary expenses.
Meanwhile, the analysis only looks at account activity over a single quarter, and also doesn’t take into account workers who expect large bonuses to arrive at the end of the year. Higher-income customers might also be able to mortgage a home or put a portion of their income into brokerage or investment accounts, Tinsley noted.
“You have people sending money to brokerage accounts or people paying their mortgages, so you could be standing on $250,000 and borrowed a lot to buy property, and that would definitely put your spending very close to your income.” said Tinsley .