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KEY TAKEAWAYS
- In 2024, 20% of households with incomes over $150,000 lived paycheck to paycheck, regularly spending more than 95% of their income on necessities, according to Bank of America.
- Higher-income households are spending nearly all they earn because they typically buy larger, more expensive homes.
- As higher-income households buy expensive homes, housing costs have increased and will continue to do so until mortgage rates drop significantly.
More higher-income households are living paycheck to paycheck as housing costs continue to increase.
Across all income levels, more households live paycheck to paycheck, which a recent report from Bank of America describes as regularly spending more than 95% of their income on necessities. In particular, households with incomes above $150,000 found themselves spending nearly all they earned this year.
Bank of America said higher-income households are stretched thin because they have bought larger, more expensive homes. This translates to higher insurance costs, property taxes, and utility bills.
Households across income brackets have been struggling to pay these expenses as climate change and inflation have pushed up prices, a separate Bank of America report showed.
“This is necessity spending we’re talking about. So it’s not like people have a choice here,” said David Tinsley, senior economist at Bank of America. “They could maybe take radical action and move to cheaper places, work more jobs, but in any reasonable sense, they’re sort of stuck in this position in the short run.”
According to the Consumer Price Index, home insurance has risen 4.5% since the beginning of 2023, electric bills have increased 4.3%, water and trash collection costs are up 8.5% and property taxes have risen 8.1%.