Despite inflation decreasing, many Americans continue to live on a paycheck-to-paycheck basis.

• Living paycheck to paycheck has become the norm for many Americans.
• Higher prices are making it more difficult to achieve middle-class status.
• There are methods for individuals and families to increase their cash flow, according to financial advisors.

The rate of inflation has come down from pandemic era highs.

A recent study from Bank of America reveals that many Americans still claim to live paycheck to paycheck, regardless of their household income being below or above $50,000 or $150,000.

How tight household budgets are is a matter of perception.

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Almost half of respondents to Bank of America's third-quarter research agreed with the statement "I am living paycheck to paycheck."

A recent analysis of internal firm data revealed that 26% of households are living paycheck to paycheck, as their spending on necessities is only slightly below their total household income. Necessity spending includes expenses such as gas, food, utilities, internet service, public transportation, and healthcare.

An unspecified number of households with a banking relationship with Bank of America were sampled by the bank.

Necessities are 'swallowing up' income

Since 2019, the percentage of households earning less than $50,000 per year who live paycheck to paycheck has increased from 32% to 35%.

Despite their high income, around 20% of households with more than $150,000 still struggle financially and live paycheck to paycheck, according to research.

Despite the U.S. economy avoiding a recession, prolonged negative feelings about the economy, known as a "vibecession," have emerged. Inflation is a major concern for voters as the November election approaches, according to an October CNBC All-America Economic Survey.

According to David Tinsley, senior economist at Bank of America Institute, it's not surprising that everyday necessity spending is consuming almost all of some people's income.

Although higher wage growth has partially offset higher prices for basic necessities, not all individuals have experienced this benefit.

Tinsley stated that for certain individuals in the population, the wage growth they've experienced does not offset the inflation they've observed in their essentials.

The Labor Department reported earlier this month that average hourly earnings were up 4% from one year ago and increased 0.4% for the month as of September. However, the ADP report shows that wages increased 4.6% from a year ago.

American Dream requires 'significantly larger income'

Other factors have also made it more challenging for individuals and families to meet their financial needs.

People are paying more for financing on credit cards, car purchases, and home improvements due to higher interest rates, according to Peter Traphagen, managing director at Traphagen CPAs & Wealth Advisors in Oradell, New Jersey. The firm ranked No. 9 on the 2024 CNBC Financial Advisor 100 list.

Traphagen stated that those who rent are among the most affected by inflation.

Traphagen stated that those who did not own assets felt the financial strain more acutely because they did not receive asset appreciation and only received cost of living increases.

Nick Roth, a financial planner at Foster & Motley in Cincinnati, stated that the pressures have made it more challenging to sustain a middle-class household. The firm was ranked No. 34 on the 2024 CNBC FA 100 list.

According to Roth, achieving the American Dream of providing a good education for your children, supporting your family, and living in a modest home may now require a potentially larger income than it did in the past.

Certain money moves can help provide flexibility

Experts suggest that implementing certain strategies can provide more flexibility in household finances.

Reducing debt balances will not only free up incoming cash for other uses, but also decrease the total amount paid.

Paying off debt can increase your net worth, even though it may not seem like a savings goal, Roth stated.

Automatically transferring small amounts of savings from paychecks can help individuals and families build a cash cushion for unexpected emergencies.

Roth advised clients to increase their savings until automatic deductions make them feel like they're living paycheck to paycheck.

After savings have been deducted, investors can confidently spend the remaining funds in their accounts, he stated.

Prioritizing long-term goals, such as retirement investing, is still important for individuals and families.

Traphagen advised post-tax Roth savers to switch to pre-tax contributions for tax deductions, which could free up more cash now.