Study Finds Just How Quickly A Worker's Paycheck Is Spent
It's there one minute, and gone the next.
Lazy_Bear | Shutterstock Picture this: It's payday, and you feel a huge sense of relief. You can finally take care of the electric bill that's been hanging over your head, and you needed some extra cash to pick up a gift for a friend's birthday this week. You pay all your bills, do a little online shopping, and then ... you somehow have only $20 left at the end of the day.
If you can relate, the good news is that you're not the only one experiencing this. Recent research shows that many Americans are also spending significant amounts of their paycheck immediately, but it's not necessarily because of bad financial habits.
A new study reveals that the average American spends almost half of their paycheck within 48 hours of receiving it.
The survey, conducted by Talker Research, asked 2,000 workers exactly how and when they spend the money from their paychecks. The results showed that most Americans spend around 48% of their earnings in 48 hours or less after it lands in their bank account. Over a third of it is spent even in just the first 12 hours, and it leaves you to wonder where exactly all this money is going.
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Well, more than half of survey participants choose to take care of their basic necessities and groceries immediately upon receiving their paycheck. Forty-eight percent pay bills due in the next week, and 42% take care of major expenses such as rent payments, mortgages, and credit card bills. Only about 1 in 3 Americans put money towards more minor expenses like utilities or subscription services.
After that initial 48-hour period, workers have to survive off what's left until the next payday. Some create budgets to help manage the money, while others prefer to wing it. Twenty-eight percent say they prioritize putting some money into savings, but not everyone can afford to do so.
Millennials spend the most money immediately after being paid, compared to other generations.
Some workers spend a larger chunk of their paycheck right away than others, as millennials report burning through 40% within 12 hours of receiving it, but it's not all impulse purchases. Almost 2 in 5 millennials practice smart money habits and plan out their spending before the paycheck even hits their account.
Unfortunately, all workers are still susceptible to overspending in the days following payday. Over one-third of all participants admitted to spending more than they should've after payday, with this number being higher for Gen Z (52%) and millennials (45%).
However, this may not be due to poor money management, but rather bad timing on bill due dates. Thirty-one percent of participants who claimed they overspend shared that most of their bills are due right away at the beginning of the month. Combine that with overdue bills that 30% say they're still dealing with, and there won't be much money left over after all that.
Younger generations are more likely to feel strapped for cash each month.
Gen Z (54%) and millennials (43%) also struggle the most with their finances, compared to 18% of baby boomers. George Kamel, personal finance expert and co-host of The Ramsey Show, shared with Newsweek: "Gen Z is facing some real financial pressure. Rent and housing costs are higher than ever, student loan payments are taking a big chunk of their paychecks, and inflation has driven up the price of everything from groceries to gas. The problem isn't a lack of effort — it's that the numbers often don't add up at the end of the month."
EarnIn, the paycheck and payroll management company that commissioned the survey, suggests that increasing the frequency of pay cycles could be a solution to the difficulties workers face around payday.
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"More frequent access to earnings helps workers pace their spending, budget more effectively, and prepare for unexpected expenses without taking on debt," EarnIn claims. "Getting paid on their own terms isn’t just convenient — it helps people maintain better control over their finances."
Kayla Asbach is a writer currently working on her bachelor's degree at the University of Central Florida. She covers relationships, psychology, self-help, pop culture, and human interest topics.
