NEW ORLEANS – A new report from Bank of America shows that just under a quarter of households nationwide are living paycheck to paycheck, spending nearly all their income on essentials such as housing, groceries, gas, utilities and childcare.
The report, “Paycheck to paycheck: Slowing but growing,” is based on Bank of America internal data that finds that in 2025 a significant portion of society, nearly 24% of U.S. households, lived paycheck to paycheck. This means they are spending more than 95% of household income on essential expenses.
The result represents a small increase of 0.3 percentage points compared with 2024 results. However, the pace of increase has slowed significantly — nearly three times lower than the jump recorded in 2024. This means more households are financially strained, but the situation is not deteriorating as quickly as it did the previous year.
More Lower-Income Households Living Paycheck to Paycheck
The burden is disproportionately concentrated among lower-income households. According to the report, 29% of lower-income households are living paycheck to paycheck in 2025, up from 28.6% in 2024 and 27.1% in 2023. By contrast, the share among middle- and higher-income households has remained largely flat.
Inflation Outpaces Wage Growth
The slower growth in financially strained households comes even as inflation continues to outpace wage growth for many Americans. Consumer prices were up 3.0% year over year in Sept. 2025, according to Bureau of Labor Statistics data, while after-tax wages for middle-income households rose 2% year over year in Oct. and lower-income households saw just 1% growth, based on Bank of America data. Bank of America data shows wage growth for higher-income households has accelerated this year, outpacing lower-income earners.
Uneven Wage Growth Widens Income Divide
Bank of America economists say the divergence reflects uneven wage growth. Pay for higher-income workers has accelerated this year, while wage growth for lower-income earners has slowed, making it harder for those households to keep up with rising costs.
Generational differences are also emerging. Middle-aged households have seen the largest increases in financial strain. Within those generations, higher-income households have significantly outpaced lower-income peers in wage growth. Among Millennials, higher-income households saw wage growth five percentage points faster than lower-income households and among Gen X, the gap was four percentage points.
Local Financial Institutions Respond
In New Orleans, where residents face elevated insurance premiums, housing costs and recurring storm-related expenses, local financial institutions say the national trend mirrors what they are seeing on the ground.
“These positive effects can be life-changing for families striving for financial stability and peace of mind,” said Jennifer “J.J.” Jaskierny, New Orleans operations manager at Credit Human, referring to the impact of consistent saving habits. Jaskierny said overspending is often driven less by poor financial discipline and more by structural and psychological pressures, including rising costs and constant consumer prompts to spend.
“Simply not spending is an unrealistic approach,” Jaskierny explains. “Which is why we
recommend a ‘spending plan’ approach that connects spending behavior today with
meaningful, attainable goals for the future. Saving doesn’t require large deposits or a complex plan — just a consistent practice of paying yourself first, no matter how little,” she said.
“Every step toward saving—whether it’s one dollar or a hundred—builds not only financial resilience, but personal confidence,” Jaskierny says. “These small but impactful habits have ripple effects from the individual through families and neighborhoods, inching us closer to Credit Human’s mission of creating communities where financial stress is something we can alleviate.”
Jaskierny said Credit Human has expanded financial education partnerships with local nonprofits and community groups, offering budgeting tools and automated savings programs aimed at helping residents build emergency reserves.
