Paycheck-to-Paycheck Foodies Skimp on Beds, Splurge on Spreads

• Paycheck-to-paycheck consumers say financial limitations are the most important reason not to travel, yet those who are comfortably able to save are the most likely to choose a staycation.
• When consumers travel, most are increasing their spending due to both inflation and desire to treat themselves.
• Consumers, especially those living paycheck to paycheck, are making compromises to make their summer travel happen.

According to the Bureau of Labor Statistics’ Consumer Price Index, inflation sits at 3.4% as of April 2024.¹ This is a significant drop from a peak of 9.1% in July 2022, and a slight drop from 3.5% last month. This rate has remained relatively stable month to month, and consumers continue to face a rising cost of living. Despite the weight of higher prices on their wallets, U.S. consumers are not refraining from summer travel in 2024 — even those living paycheck-to-paycheck lifestyles.

Growing numbers of consumers experience financial uncertainty. Currently, 64% of U.S. consumers live paycheck to paycheck, up from 61% in April 2023. In fact, one-quarter of consumers report their financial situation has worsened this year. There is also good news: More consumers are optimistic about their finances than not. This optimism is driving consumers across financial lifestyles to plan travel this summer.

These are just some of the findings detailed in this edition of “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS Intelligence report. This edition, Summer Travel in Financially Challenging Times, examines the financial lifestyles of U.S. consumers and explores how inflationary pressures and other financial challenges impact their ability to travel this summer. This edition draws on insights from a survey of 2,238 U.S. consumers conducted from April 9 to April 22 and an analysis of other economic data.^2,3,4

• What’s at Stake
• Key Findings
• Conclusion
• Methodology

What’s at Stake

Growing numbers of U.S. consumers find it hard to live on their monthly earnings. As of April 2024, 64% lived paycheck to paycheck, a 3 percentage point increase from last April. In addition, 21% struggle to pay their bills, up from 19%.

Among income brackets, 49% of consumers earning more than $100,000 lived paycheck to paycheck as of April 2024. This share is unchanged compared to last year.

Among middle-income consumers, 66% lived paycheck to paycheck, compared to 63% in April 2023. The rise is sharper for lower-income consumers. In April 2024, 79% of lower-income consumers lived paycheck to paycheck, up from 73% last April.

These findings suggest how much the rising cost of living has impacted low- and middle-income consumers.

The share of consumers who say their finances have worsened decreased by 34% in the last year. Meanwhile, the share of consumers reporting improved finances rose by 31%, demonstrating increased financial optimism.

The lower a consumer’s income, the more likely they are to report that their finances have gotten worse. While 20% of consumers earning more than $100,000 say their finances have worsened, 35% of those earning less than $50,000 say the same. Among those struggling to pay their bills, 55% report that their finances have worsened in the last year.

Key Findings

Increased financial optimism has most consumers traveling this summer, regardless of financial limitations.

Most consumers plan to travel this summer. In fact, 88% of consumers who traveled last summer plan to do so this year. Moreover, 75% of consumers not living paycheck to paycheck plan to travel this year, while 61% of paycheck-to-paycheck consumers without issues paying their bills and 44% of those struggling to pay monthly bills have travel plans this summer. Even among consumers who say that their financial situation has worsened in the last year, 36% traveled last year and plan to travel this summer. This suggests that consumers are finding ways to manage their finances to make travel possible.

Despite financial optimism among many consumers, economic uncertainty has put a damper on summer travels for consumers with less financial security. Among those with no travel plans, 54% cited being unable to afford a vacation as the top reason. This share rises to 79% among paycheck-to-paycheck consumers with issues paying their monthly bills. Financial limitations remain the most important reason for paycheck-to-paycheck consumers to not travel.

Consumers not living paycheck to paycheck are the most likely to prefer a staycation to travel. In fact, 22% of these consumers say preferring to stay home is the top reason they are not traveling this summer, compared to just 5.5% of struggling paycheck-to-paycheck consumers. Other reasons they cite include preferring to travel when things are less busy and health issues. This suggests they might be seasoned travelers who choose to avoid the higher costs and crowds of tourists common during summer travel.

When consumers travel, most are increasing their spending due to both inflation and the desire to treat themselves.

Consumer spend on traveling is growing this year. Nearly half of consumers plan to spend more on summer travel, while 38% plan to spend about the same. Just 13% of consumers plan to reduce their travel spending. Among paycheck-to-paycheck consumers struggling to pay monthly bills, 20% plan to spend less on travel this summer, and 47% plan to increase their travel spend. This share is slightly more than the share among paycheck-to-paycheck consumers living without difficulties (45%). Approximately half of consumers across financial lifestyles plan to spend more, implying that travelers may splurge this year. However, we cannot discount inflation’s impact on costs for hotel, food and leisure activities.

Consumers with limited resources are taking shorter trips to reduce travel spending. On average, they plan to take 1.3 trips this summer. Those with more secure financial lifestyles plan on taking additional trips. The longest trip consumers plan to take lasts just more than one week, on average. The average consumer plans to take roughly nine days total, suggesting a couple of weekend trips combined with a week-long trip may be a common approach. Gen Z and baby boomers and seniors take the longest trips.

Data also shows that those with greater financial security take longer trips. For instance, those not living paycheck to paycheck and those earning more than $100,000 are most likely to take six to 15 days of vacation, with both averaging 10 days per year. Struggling paycheck-to-paycheck consumers and those earning less than $50,000 are most likely to plan to take five days of vacation or less. Less affluent and financially struggling consumers appear to be budgeting where they can travel this summer despite limited resources.

Financing options and savings keep paycheck-to-paycheck consumers traveling this summer.

Consumers with more constrained finances are more likely to turn to financing to pay for their vacations. When they do, they also finance more of their trip, and it takes longer to pay it off. For instance, 62% of those living paycheck to paycheck who struggle to pay monthly bills expect to finance at least part of their travel expenses, with 37% planning to finance at least half. Meanwhile, 52% of those who live without issues paying bills expect to finance at least part of their travel expenses, with 25% plan to finance at least half. Just 31% of consumers not living paycheck to paycheck expect to finance at least part of their travel expenses.

Credit cards are consumers’ most used form of financing for summer travel. Some pay expenses off right away, while others pay over time. Among consumers who do not live paycheck to paycheck, 71% use credit cards to pay for travel spending to earn rewards and pay the full balance off when due, as do 58% of consumers living paycheck to paycheck. Meanwhile, paycheck-to-paycheck consumers with issues paying their bills are the most likely to pay off their credit cards in installments. Paying in installments, however, takes them longer to pay off travel spending and means that travel tends to cost these consumers more in the long run.

Paycheck-to-Paycheck Consumers Think Vacations Are Worth Saving For

Though they are more likely to finance their vacations, paycheck-to-paycheck consumers are also more likely to tap into savings to fund their summer travel. Consumers with subprime credit scores are also likely to use their savings. Data shows that paycheck-to-paycheck consumers are more likely to have poor credit scores and less likely to have credit cards, especially those who struggle to pay their monthly bills. For many paycheck-to-paycheck consumers, using their savings may be the only option to fund their vacation.

At 59%, struggling paycheck-to-paycheck consumers are the most likely to expect to spend more than half of their savings. For example, they are nearly 2.5 times more likely to do so than paycheck-to-paycheck consumers living without difficulty. Meanwhile, 4 in 10 Gen Z travelers and consumers with subprime credit scores expect to spend more than half of their savings on summer travel.

Just 15% of struggling paycheck-to-paycheck consumers expect to spend less than half of their savings. This share rises to 29% among paycheck-to-paycheck consumers without issues paying their bills. In fact, 47% of paycheck-to-paycheck consumers without issues paying their bills do not plan to tap into savings. Just 26% of those struggling to pay bills say the same.

Despite 3 in 4 paycheck-to-paycheck consumers struggling to pay their bills every month using their savings to travel, 46% report no savings to use in an emergency. These findings suggest that these paycheck-to-paycheck consumers travel even when it places them in a precarious financial situation.

Though most travelers are increasing spend in favor of more opulent vacations, paycheck-to-paycheck consumers are making compromises to better afford their summer travel.

Among travelers who live paycheck to paycheck, 1 in 5 expect to spend less this summer. Being conservative in their spending is the top reason, cited by approximately half of those living paycheck to paycheck. Other top reasons include earning less money than last year and needing money for other expenses.

Earning less money than last year is the second-most important reason, cited by 43% of struggling paycheck-to-paycheck consumers and 28% of those without issues paying their bills. Significant shares of paycheck-to-paycheck consumers also said they needed the money for other expenses, with 23% of those struggling to pay bills and 20% of those without issues paying their bills giving this reason.

Paycheck-to-paycheck consumers are the most likely to travel to more budget-friendly locations and travel in groups to save money. Financially challenged consumers make summer travel a reality by managing their spending in various ways.

Paycheck-to-paycheck consumers’ financial constraints impact their priorities when planning summer travel.

PYMNTS Intelligence finds that 25% of those who do not live paycheck to paycheck consider accommodations their top priority. In comparison, 20% of paycheck-to-paycheck consumers living without difficulty and 15% of those who struggle to pay bills say the same. Trip duration is slightly more important for those living paycheck to paycheck. We find that 17% of struggling paycheck-to-paycheck consumers and 16% of those living without difficulty consider trip duration a top priority. In contrast, just 12% of consumers not living paycheck to paycheck say the same. Paycheck-to-paycheck consumers are more likely to prioritize transportation quality and meal variety.

Paycheck-to-paycheck consumers may think shorter or more modest travel is better than none at all. These budget-conscious consumers may see lodging as just a place to sleep, which could allow them to spend more on nicer transit and good food.

Consumers say traveling on preferred dates is important at similar rates across financial lifestyles. However, those living paycheck to paycheck are less likely to know when they will travel or have pre-selected travel months. This is especially true among struggling paycheck-to-paycheck consumers. Data shows that 6.5% of those who do not live paycheck to paycheck and 8.9% of paycheck-to-paycheck consumers without issues paying bills have not decided when they will travel this summer, compared to 17% of struggling paycheck-to-paycheck consumers. Some of these consumers may be waiting to see how much they can save with last-minute travel deals.

Conclusion

Even with ongoing inflationary pressures, many consumers feel optimistic about their financial situation. This has translated into a growing interest in traveling this summer. Many consumers are increasing their spending to travel this summer. Those living paycheck to paycheck are making compromises to better afford their summer vacations. For example, they are less likely to say the quality of their accommodations is a priority. Instead, they are more interested in extending the duration of their travel and eating quality meals. Whether turning to financing options or tapping into savings, financially struggling consumers are doing what they can to make summer travel a reality.

Methodology

“New Reality Check: The Paycheck-to-Paycheck Report: Summer Travel in Financially Challenging Times,” a PYMNTS Intelligence report, draws on insights from a survey of 2,238 U.S. consumers conducted from April 9 to April 22 and an analysis of other economic data. 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 38% had incomes of more than $100,000 per year.

Read PYMNTS’ April 2024 “New Reality Check: The Paycheck-to-Paycheck Report” for more.

<sup>1. [Author unknown. Consumer Price Index. U.S. Bureau of Labor Statistics. 2024. https://www.bls.gov/cpi/. Accessed May 2024.]↩
2. [Author unknown. Consumer Credit – G.19. Board of Governors of the Federal Reserve System. 2024. https://www.federalreserve.gov/releases/g19/current/. Accessed May 2024.]↩
3. [Author unknown. Current Employment Statistics – CES (National). U.S. Bureau of Labor Statistics. 2024. https://www.bls.gov/ces/. Accessed May 2024.]↩
4. [Author unknown. Consumer Price Index Summary. U.S. Bureau of Labor Statistics. 2024. https://www.bls.gov/news.release/cpi.nr0.htm. Accessed May 2024.]↩</sup>