Saving

56% of Americans are living paycheck to paycheck — and 43% really need the third stimulus

"When the world is chaotic, you do everything in your power to make smart money moves."

Share
Twenty/20

It's no surprise that the pandemic hurt Americans' finances. But even after a year of Covid, the numbers are still striking: More than half, 56%, of adults are living "paycheck to paycheck" and 43% say they are "extremely" or "very" reliant on the third round of government stimulus checks arriving this month.

That data comes from JungleScout's Consumer Trends Report for the first quarter of 2021, which polled over 1,000 U.S. adults about their money and spending habits. The same share of people were living paycheck-to-paycheck when they were surveyed in the last quarter of 2020.

"When the world is chaotic, you do everything in your power to make smart money moves," says Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors. That means "playing for the rebound" with any cash influx you get from relief funds or a tax refund.

If you've lost income in the Covid crisis, "it's your job to use the money wisely," he adds. "You are trying to get in the position to be financially astute again."

Millions of Americans still need financial assistance

Part of the reason so many people are struggling to get by in 2021 is that they had a tough 2020. Nearly half, 48%, of those surveyed reported experiencing unexpected financial setbacks in the last three months. And about 1 in 4, 23%, needed a federal, private, family, or student loan to make ends meet.

A separate poll taken by SurveyMonkey last month shows more of the lingering effects: As many as 40% of Americans took "emergency financial actions" recently, such as digging into savings or asking for help.

VIDEO3:2303:23
5 lesser-known benefits in the stimulus bill besides $1,400 checks

Video by Stephen Parkhurst

The other biggest money stressors, according to JungleScout, were whether people had enough emergency savings or a large enough retirement fund. They also worried about compensating for lost income and how to pay for housing costs like utilities or a home purchase.

Other reports show similar patterns. Three in 10 adults pulled an average of $6,757 out of their retirement account because they lost a job or needed extra cash, a survey from MagnifyMoney found in May. And research firm Highland reported in October that nearly 50% of the 2,000 people polled said they had run out of emergency savings.

Smart money moves that can help

The financial needle seems to be moving in the right direction, though. Recently, a SurveyMonkey poll of more than 6,100 adults found that only 13% tapped into a savings account and just 12% borrowed money from a family member or friend.

Whatever your financial status is, La Spisa says the chief priority should be getting your budget in order. "It's all the fundamentals," he explains: Pay yourself first. Have a plan for extra cash.

"Try to tighten the belt and figure out what to do with your existing budget," he says. Don't neglect immediate expenses in order to put extra cash toward retirement or a big purchase.

Focus on the essentials first with any stimulus money or tax refund you may receive, like outstanding bills and an emergency fund. Then you can shift toward saving for the future, paying down lingering debt, and tackling your other goals.   

VIDEO2:1002:10
What is a high yield savings account?

Video by Stephen Parkhurst

If you need to boost your cash flow, start by cutting back on the little things. Use just one or two streaming services at a time and pick up a side hustle if you need to. Put money regularly in a high-yield savings account to capitalize on compound interest, which can help your cash grow.

How successfully you can use a cash influx will depend on personal circumstances, but you shouldn't rely just on that," says La Spisa. "Bottom line: You can't spend money that you can't count on. Keep as much as you can set aside because you don't know when you'll need it."

Grow is published by Acorns + CNBC. Acorns helps you invest spare change automatically into diversified portfolios. Download the app today or learn more at Acorns.com.

More from Grow: