Americans spend most of their paychecks on bills and suffer ‘pay paralysis’, forcing them to avoid social events

NEW research finds that the average American feels prepared for the worst when they save $5,078.

The survey of 2,000 employed Americans, split evenly by generation, found that Gen Z needs at least $4,286 in their bank account at any given time to feel prepared.

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Meanwhile, baby boomers would like to have almost $6,500 ($6,490.70), and Gen X would feel more secure with about $5,000 ($4,910.10).

Conducted by Talker Research on behalf of Bellresults revealed that 63% believe they could afford an unexpected $500 expense – although 30% of them admit it would put a strain on their finances.

Another 17% could not currently afford this type of expense, but believe they could eventually find some way to afford it.

To reduce this cost, 32% of respondents would use their savings, while 28% would call family and friends.

A quarter (26%) said they would pay for unexpected expenses by temporarily postponing other expenses, such as shopping or less important bills.

Almost three in four (72%) spend the majority of their salary on paying bills and 69% said this is the first thing they do when they get paid.

Twenty-nine percent of respondents said the first emotion they feel when they receive their paychecks is “excitement.”

However, this is often followed by feelings of stress (19%), preparedness (19%), and overwhelm (19%).

Before payday, 39% admitted they are more likely to avoid social events to save funds for when they really need it.

This is likely the result of trying to combat the feeling of “pay paralysis” that 59% experience – a wave of anxiety or fear due to low funds between pay cycles.

“Research also found that the average American starts feeling stressed about their money just seven days after receiving their paycheck,” said Madhu Muthukumar, chief product officer at Chime.

“It’s clear that rising costs are impacting Americans’ well-being and people need simple, useful and powerful tools to manage their budget, especially between paychecks.”

The results also revealed that the average American is taking steps to increase their savings – setting aside 16% of their salary.

Gen Z was found to be the most careful, saving almost a quarter (23%) of their salary.

The Millennial generation, in turn, said they can set aside 17% of their salary for their savings.

Gen Xers are saving 12% and baby boomers are saving 11%.

Although 40% admit that their mental health is being negatively affected by their current financial situation, 72% agreed that maintaining financial well-being has a positive impact on their mental health in the same way as meditation or mindfulness.

“Set clear financial goals that prioritize your needs and expenses. Open communication about your financial limits can lead to better understanding and support in your inner circles,” said Dasha Kennedy, personal finance advocate at Chime.

“And practice open communication – talking about your financial limits can lead to better understanding and support from your inner circles.

“That means it’s okay to say ‘no’ to events or purchases that don’t fit into your budget. Take the lead in suggesting group activities using free or low-cost activities to stay connected without going over your budget.”