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Survey: Paycheck cycle remains pronounced

Most Americans are locked in a struggle to make ends meet, which is why Walmart’s message of saving people money so they can live better is resonating stronger than ever.

Just how bad is it out there? That’s what the Certified Financial Planner Board of Standards and the Consumer Federation of America wanted to know. The organizations’ this week released discouraging results from their annual financial planning survey that show the number of people living paycheck to paycheck is up, there is a high degree of pessimism about the future, and household net worth levels are below where they were 15 years ago when the study was first conducted.

“Saving enough money for future goals like retirement and kids’ college, while also maintaining an adequate emergency fund and staying out of serious debt, has always been a challenge,” according to the study. “This was true even in the more favorable economic climate of 1997, when Princeton Survey Research Associates International first surveyed household decision‐makers about these topics. In 2012, with high unemployment, stagnant incomes and reduced net worth, those challenges are even greater.”

The median family, the theoretical family that is richer than half of all American families and poorer than the other half, had a net worth of $77,300 in 2010 compared with $126,400 in 2007 according to the Federal Reserve statistics cited in the study. This means the average family has no more wealth today than it did in the early 1990s, wiping out nearly two decades of economic gains.

As a result, in 2012, households where people live from paycheck to paycheck (38%) outnumber those where people feel financially comfortable (30%). Fifteen years ago, when economic conditions were much more positive, those percentages were reversed.
A lot of the gloom stems from the decline in housing prices because for most Americans their home is their largest asset. However, one fourth of those who responded to the survey said they owe more than their home is worth.

A copy of the study with complete details on the thorough methodology is available by clicking here.