New Bank of America data reveals that only 30% of Americans actually live paycheck to paycheck, despite nearly half claiming to do so.

Spending less than you earn is the key to achieving most financial goals, including saving for retirement and buying a car.

The recent Bank of America survey found that the share of Americans who live paycheck to paycheck has been steadily increasing over the past two years, as prices for essentials like rent and groceries have grown faster than wages can keep up.

According to Bank of America, nearly half of Americans agreed with the statement "I am living paycheck to paycheck" in the third quarter of 2024, although this share decreased slightly from the second to third quarters of the year. In 2022, less than 40% of Americans felt this way.

To determine if households are living paycheck to paycheck, Bank of America established a threshold of spending at least 90% of income on necessities. However, each respondent's definition of living paycheck to paycheck may differ.

According to Bank of America's internal data, approximately 30% of American households live paycheck to paycheck, while 26% of households spend 95% or more of their income on necessities.

Despite the fact that not all transactions were included in the data, which only recorded post-deduction incomes and funds kept in Bank of America accounts, the findings still reveal a divide among Americans in how they perceive themselves and their financial circumstances.

'Perceptions can sometimes deviate from reality'

The difference in the percentage of people who claim to live paycheck to paycheck, as estimated by Bank of America, may be due to varying interpretations of what this phrase entails.

According to David Tinsley, senior economist at Bank of America Institute and author of the report, people may have a slightly broader perception of themselves.

Going out to dinner a couple of times a month can help someone who works a full-time, decent-paying job bring their monthly spending closer to their income. While it's not a necessity, it's not an egregious splurge either. However, if it becomes unaffordable, the person may feel like they're living paycheck to paycheck, according to Tinsley.

Saving for emergencies or retirement is considered a necessity by some, but a luxury by others.

Tinsley believes that perceptions can differ from reality, but people's aspirations often extend beyond merely surviving.

Who has room to cut back?

Households with incomes below $50,000 are more likely to have necessary spending exceeding 95% of their income compared to households with incomes between $75,000 and $100,000, according to Bank of America.

According to the report, it appears that higher expenses are the main reason households are struggling financially, rather than simply earning a low income.

According to Bank of America's analysis, approximately 20% of households with an annual income over $150,000 allocate over 95% of their income towards necessities. This may be due to the higher expenses associated with larger homes and more expensive vehicles, as mentioned by Tinsley.

On average, households living paycheck to paycheck spend 90% more on necessities than those living comfortably, despite their incomes being only 20% smaller.

While lower-income households may struggle to find affordable options due to high essential costs, higher-income households may have more flexibility to reduce expenses and adjust their spending, according to Tinsley.

Those with low incomes are unlikely to reduce their grocery spending and may not be able to relocate to a more affordable location, according to him.

At the top end of the income spectrum, there may be some flexibility in spending choices.

Earn more money at work by taking CNBC's online course on negotiating a higher salary. Expert instructors will teach you the necessary skills to increase your paycheck, including how to prepare, build confidence, communicate effectively, and craft a counteroffer. Start now and use the coupon code EARLYBIRD for a 50% discount through November 26, 2024.

Sign up for CNBC Make It's newsletter to receive expert advice on work, money, and life.