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Share of Americans living paycheck to paycheck jumped in 2022

Shoppers in San Francisco on Dec. 21, 2022.

David Paul Morris | Bloomberg | Getty Images

Months of high inflation have weighed heavily on households.

As of December, 64% of Americans were living paycheck to paycheck, according to a recent LendingClub report — up from 61% a year earlier and in line with the historic high first hit in March 2020.

For the first time, more than half of all six-figure earners also said they were stretched too thin, a jump from 42% a year ago. 

“The effects of inflation are eating into every American’s wallet and as the Fed’s efforts to curb inflation drive up the cost of debt, we are seeing near record numbers of Americans living paycheck to paycheck,” said Anuj Nayar, LendingClub’s financial health officer.

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For its part, the Federal Reserve is widely expected to announce its eighth consecutive rate hike at this week’s policy meeting. 

Even though wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which in December was up 6.5% from the prior year.

That leaves many Americans in a bind as inflation and higher prices force more people to dip into their cash reserves or lean on credit just when interest rates rise at the fastest pace in decades.

Other reports also show financial well-being is deteriorating overall.

How to get your budget back on track

Certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta and a member of CNBC’s Financial Advisor Council, offers his best advice for spending less and finding a better return on your savings.

1. Cut spending

Jenkin said some simple financial hacks can help, such as going to the grocery store less and cutting back on online shopping.

“Grocery stores are just like Las Vegas; they are there to separate you from your wallet,” he said. Meal planning is one way to edit down your shopping list to weekly essentials and save money.

Why salaries in the U.S. don't keep up with inflation

2. Boost savings

Another option is to purchase federal I bonds, which are inflation-protected and nearly risk-free assets.

I bonds are currently paying 6.89% annual interest on new purchases through April, down from the 9.62% yearly rate offered from May through October 2022.

Still, this will work well as a hedge against inflation for long-term savers. The downside is that you can’t redeem I bonds for one year, and you’ll pay the last three months of interest if cashed in before five years.

LendingClub’s paycheck-to-paycheck report is based on a survey of nearly 4,000 U.S. adults in December.

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