Nearly 8 Out of 10 Consumers Have Depleted
Savings to Cover a Major Expenditure
Conversely, over One-Third of Consumers
Earning More than $200,000 Annually
Have Increased Their Savings Ability
SAN
FRANCISCO, Oct. 30, 2023 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company
of LendingClub Bank, America's leading digital marketplace bank,
today released key findings from the 27th edition of the
Reality Check: Paycheck-To-Paycheck research series, conducted
in partnership with PYMNTS Intelligence. The Savings Deep Dive
Edition examines consumers' ability to preserve their savings in
the current economic environment, especially when faced with major
expenditures. This edition draws on insights from a survey of 3,648
U.S. consumers conducted from Sept. 5 to
Sept. 20 and an analysis of other economic data.
The Paycheck-to-Paycheck Landscape
Living paycheck to paycheck remains the main financial lifestyle
among U.S. consumers. As of September
2023, 62% of consumers lived paycheck to paycheck, unchanged
from a year prior. Seventy-nine percent of consumers earning less
than $50,000 yearly live paycheck to
paycheck, as well as 68% and 44% of middle- and high-income
consumers, respectively. Moreover, over one-fifth of U.S. consumers
reported struggling to pay their bills — nearly 3 percentage points
higher than this time last year. The share of consumers living
paycheck to paycheck without issues paying monthly bills is 41%,
down from 43% last year, while the share of those not living
paycheck to paycheck has remained the same at 38%.
Consumer Savings Capacity
Aggregate consumer savings amounted to an average of
$11,000 per consumer in September 2023, roughly unchanged from a year
ago. Overall, 44% of consumers reported diminished savings capacity
relative to a year ago, with 50% of those earning less than
$50,000 yearly reporting such
changes. Conversely, at 35%, consumers earning more than
$200,000 annually are the most likely
among income brackets to cite increased savings ability. Across
groups, more than one-third of consumers are optimistic regarding
increasing their savings capacity in the year to come — an
indication that consumers expect to tighten their belts when they
can.
"Inflation is taking its toll on Americans' ability to
save, and while consumers remain optimistic, they are still
reporting that their monthly expenses outpace their incomes," said
Alia Dudum, LendingClub's Money
Expert. "While unemployment and wage growth are low, consumers with
middle- to high-incomes are getting squeezed the most as interest
rates rise, and items that were once considered routine are now a
luxury."
Average Savings Deplete Every Four Years
The research also indicates that nearly 8 out of 10 consumers
(78%) recall having at least one expenditure which required them to
withdraw a significant portion of their savings. While it is more
prevalent with consumers who cite issues paying their bills (90%),
a solid majority of consumers not living paycheck to paycheck (67%)
have also done so. These depletions occur on average every four
years and use 67% of the average consumer's available savings, with
Gen Z emptying 70% of their savings as often as every two years.
Among paycheck-to-paycheck consumers, these withdrawals occur every
2.2 years and require 76% of their savings balances, on average,
for those struggling to pay bills; and they occur every 2.8 years
and require 73% of savings, on average, for those living paycheck
to paycheck without difficulty. Among consumers not living paycheck
to paycheck, the share of savings required is 58% and is depleted
every 5.8 years, on average.
Key Reasons for Savings Depletion
At 31%, emergency expenses, such as medical bills or unexpected
repairs, are the top reason consumers deplete their savings,
followed by job loss or income reductions, at 20%. This aligns with
LendingClub's and PYMNTS Intelligence's research from June, which
found average consumer emergency expenses rose 16% to $1,700 from the prior year, far above the Federal
Reserve's $400 benchmark.
This latest research also indicates that Americans are dipping
into their savings for discretionary spending, such as major life
events (24%), travel (13%), and purchasing expensive items (12%).
Consumers disclose that financial contingencies, such as debt
accumulation (15%) and investment losses (15%), also cause them to
deplete their savings. Moreover, younger consumers, at 51%, are
more likely to tap into savings for major life events, such as
marriage or buying a home, or splurge on expensive items or travel,
making it more difficult to maintain higher savings levels.
Ease of Access to Funds and Fear of Risk Determine How
Individuals Save
Despite ongoing inflationary pressures, there are no significant
changes in the drivers of saving patterns when comparing 2023 to
2022. Even amid inflation worries, ease of access remains a top
determinant in how consumers choose to save, with close to half of
consumers citing speedy and convenient access to their funds as one
of the drivers. Minimizing risk, at 19%, continues to outpace
maximizing returns, at 14%, as consumers' top motivation when
choosing how to save.
That said, consumers have benefited from better returns from the
stock market this year, even as just one-tenth of savings are
stored in these financial assets. Fifty percent of domestic stock
investors reported increased values in their savings in the quarter
prior to the survey — up from 31% when surveyed in 2022.
"When you take a deeper look at public savings data, increased
saving rates are concentrated among those aged 55 and older,"
continued Dudum. "For those aged 34–44, their saving rates are
compressed. As Americans spend upwards of $700 more per month on everyday goods and
services than they did two years ago, we will likely see increased
pressure on the overall household balance sheet and continued
reliance on credit."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-consumer-savings-debt-investment
Methodology
New Reality Check: The Paycheck-to-Paycheck Report, a PYMNTS
Intelligence and LendingClub collaboration is based on a
census-balanced survey of 3,648 U.S. consumers conducted from
Sept. 5 to Sept. 20 as well as an
analysis of other economic data. The data in this report is not
intended to be a representation of LendingClub's core member base.
The Paycheck-to-Paycheck series expands on existing data published
by government agencies, such as the Federal Reserve and the Bureau
of Labor Statistics, to provide a deep look into the core elements
of American consumers' financial wellness: income, savings, debt
and spending choices. Our sample was balanced to match the U.S.
adult population in a set of key demographic variables: 51% of
respondents identified as female, 33% were college-educated and 39%
declared incomes of more than $100,000 per year.
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of
LendingClub Bank, National Association, Member FDIC. LendingClub
Bank is the leading digital marketplace bank in the U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$90 billion in loans, our advanced
credit decisioning and machine-learning models are used across the
customer lifecycle to expand seamless access to credit for our
members, while generating compelling risk-adjusted returns for our
loan investors. Since 2007, more than 4.7 million members have
joined the Club to help reach their financial goals. For more
information about LendingClub, visit
https://www.lendingclub.com.
CONTACT:
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
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SOURCE LendingClub Corporation