A recent survey by Debt.com has shed light on a paradoxical trend in the financial health of Americans: despite a notable increase in budgeting practices, more individuals are living paycheck to paycheck than in previous years. The 2024 budgeting survey, involving 1,000 Americans, found that 90% of respondents now budget, up from 70% seven years ago. Yet, the percentage of those living paycheck to paycheck has risen from 50% in 2022 and 2023 to 60% in 2024.
Howard Dvorkin, CPA and chairman of Debt.com, remarked on the findings, indicating that while budgeting is becoming more common and beneficial, it hasn't fully shielded Americans from financial hardships. This observation points to the influence of wider economic pressures beyond individual financial management practices.
On a positive note, the survey revealed that 89% of respondents credit budgeting with helping them avoid or escape debt, a significant increase from 73% in 2018. This benefit was most pronounced among Millennials, with 92% reporting debt avoidance through budgeting, followed by Gen X (90%), Baby Boomers (86%), and Gen Z (83%).
The reasons for budgeting vary, with 38% aiming to increase wealth and savings, 21% focusing on debt reduction, and 17% citing inflation and cost of living as primary motivators. Other reasons include retirement savings (15%), job loss (6%), and post-divorce or spousal loss financial management (2%).
Gender differences in budgeting were also noted, with men (94%) more likely to budget than women (87%). Women often cited limited income as a barrier, whereas men found budgeting too time-consuming.
This trend of increasing financial strain despite more widespread budgeting underscores the need for comprehensive solutions beyond personal financial management. Factors such as the rising cost of living, wage stagnation, and economic uncertainty may be contributing to this issue, suggesting that budgeting alone is insufficient to ensure financial stability.
The findings highlight the importance of enhanced financial education and policy interventions to support Americans' financial well-being. As economic challenges persist, the survey advocates for a holistic approach to financial wellness, combining budgeting with broader strategies to address the root causes of financial instability.
