ONE PAYCHECK AWAY
ONE PAYCHECK AWAY
Across the country, most people experience some degree of financial insecurity. In 2017, about 80% of all Americans reported living paycheck-to-paycheck. Of those, 70% report some type of debt, and over half of that group believes they will never pay it off. Arizona has the fourth highest rate of asset poverty, a measure of a household’s ability to cover 3 months of expenses in case of an emergency, in the country. For Arizonans living paycheck-to-paycheck, one unexpected emergency—a major illness or injury, a death in the family, a broken-down car, a leaky roof—can lead to homelessness.
Only 66% of Americans would be able to cover an emergency costing $400. When the cost of the emergency goes up to $1000, the percentage who could afford it drops to 41%. That means over half of the population would have to turn to savings or borrow money. However, high rents carve away at banks accounts faster than low wages can replenish them. Many savings accounts charge substantial fees for balances lower than $500, which could take months for someone working a low-wage job to save after necessary expenses. Payday lenders exploit this problem, often trapping people into an expensive cycle of debt.
Over half of the people without a savings account are seniors, over the age of 62. Seniors also have a relatively high likelihood of sudden medical expense and take longer to return to work after an injury or illness. High rates of social isolation, especially following the death of a close family member, could leave a senior with no options following an unexpected expense.
Because of the multi-faceted barriers to financial security, a sudden expense—or even a drastic pay cut or rent increase—costs many people everything. Even people who consider themselves financially stable may be just one paycheck away from losing their homes.