With prices rising almost across the board, it’s getting harder to afford basic necessities, causing some Americans to fall behind.
So far, 32% of adults have paid a bill late in the past six months, according to a recent report from LendingTree, with 61% saying it’s because they didn’t have the money available to cover the cost.
About 40% said they are less able to pay their bills compared to a year ago, according to the report. Most said they were late on a utility bill, credit card payment, or cable or internet bill.
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“Life is getting more expensive every day, and it’s zeroing out Americans’ financial margin for error, which is already small,” said Matt Schulz, principal credit analyst at LendingTree.
“Unless they have been able to increase their income, millions of Americans have had to make sacrifices due to inflation to pay the bills,” he added.
There’s no question that persistent inflation has weighed on consumers, leaving more Americans living paycheck to paycheck.
The consumer price index, which measures the average change in the prices of consumer goods and services, rose 8.3% more than expected in August, driven by increases in food, housing and health care costs.
Although real average hourly earnings also rose 0.2% seasonally adjusted for the month, they remained 2.8% lower than a year ago, leaving more households in distress.
Those struggling to pay for their daily lifestyle tend to be more reliant on credit cards and carry a higher monthly balance, making them financially vulnerable.
“Americans need to create a contingency plan to handle not only rising interest rates, but also soaring prices for basic necessities,” said Allen Amadin, president and CEO of American Consumer Credit Counseling.
Most financial experts recommend having at least six months of expenses set aside in an emergency fund. However, Rose Niang, director of financial planning at Edelman Financial Engines, advises clients to save closer to 12 months, considering inflation and a clear slowdown in the economy.
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