More American households are living paycheck to paycheck, according to a new study.

Bank of America Institute examined internal data and found that in 2025, nearly a quarter of all households are estimated to live paycheck to paycheck. That is up from 23.5% in 2024.

A household lives paycheck to paycheck if, according to Bank of America Institute, its necessity spending – which includes things like childcare, housing, gasoline, credit card payments, car payments and groceries – exceeds 95% of its income over a quarter.

There is a slight bright spot though, said Bank of America Institute economist Joe Wadford. While there has been an increase in the overall number of households who are living paycheck to paycheck, the pace of growth has slowed down nearly three times from 2024 levels. The pace of growth for 2025 was a 0.3% increase, while it was a 0.9% increase in 2024, Wadford told USA TODAY.

Millennials, Gen X counterparts are living paycheck to paycheck

The slowdown in growth of households living paycheck to paycheck can be attributed to the number of lower-income households, especially millennials and Gen X, who are living paycheck to paycheck, said Wadford. There has also been almost no increase in the number of higher- and middle-income households living paycheck to paycheck, the report said.

"That's very much a wage story," Wadford said. "Since the beginning of the year, wages for lower-income households have continued to fall...while inflation continues to remain stubbornly high."

In 2025, 29% of lower-income households live paycheck to paycheck, up from 28.6% in 2023 and 27.1% in 2023.

Where you live may make a difference

There are also regional differences when it comes to households living paycheck to paycheck.

The share of households living paycheck to paycheck increased in the Northeast, which includes New Jersey, New York and Pennsylvania. The Midwest, which includes Illinois, Indiana, Michigan and Ohio, also increased compared to the 2024. Meanwhile, the share went down for those living in the South, which includes Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia. The number of households living paycheck to paycheck in West, which includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming, also decreased.

The South and the West had some of the lowest inflation rates in the country, looking at inflation data, said Wadford. That could explain likely easing of some financial burdens for consumers in those regions, he said.

But inflation has started to accelerate from last year, the report said, "so in our view, it is possible that these rising costs may renew or expand financial pressure on consumers in these areas after only a brief respite," the report said.

Paychecks are getting spent quickly

The speed at which consumers are spending their paychecks is also quick. According to new data from Talker Research for EarnIn, the average American spends more than a third of their paycheck within the first 12 hours of receiving it.

In a survey of 2,000 Americans split evenly by generation, millennials spent even quicker – an average of 40% of their paycheck within the first few hours of receiving it.

The average American surveyed said nearly 48% of their paycheck was spent within 48 hours.

Most of the early spending went toward essentials, with more than half of respondents saying they cover groceries or necessities (52%). Forty-eight percent said they paid bills within the week and 42% take care of other major obligations like housing or credit cards.

It is also not low- and middle-income wage earners who live paycheck to paycheck. In a poll by Harris, three-quarters of six-figure earners portray themselves as living paycheck to paycheck and needing to use a credit card because they ran out of cash, as previously reported by USA TODAY.

Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which breaks down complex consumer and financial news. Subscribe here.