Most Americans know the pain of having their earnings hit their bank account each month, only to fly immediately out the door for a mortgage or rent, food, electricity, gas, cellphone bills and other essentials, along with incidentals. What millions of struggling consumers don’t know is that there’s a pain reliever for that condition: budgeting apps. Used right, the analgesic can help cure pocketbook precariousness and lessen financial anxiety.
In May, 684 out of every 1,000 U.S. consumers reported living paycheck to paycheck, a whisker above 682 in April but a new high, a forthcoming report from PYMNTS Intelligence shows. Just two years ago, 570 consumers walked that financial tightrope.
For those Americans, budgeting apps are the equivalent of an over-the-counter remedy, available to all at low cost. Yet fewer than 1 in 10 use dedicated, advanced budgeting tools like Intuit’s Credit Karma (which absorbed Mint last year), Expensify, SoFi or any of the dozens of others out there, despite their demonstrated ability to lower financial stress and help put a pocketbook in order. Those apps are available to consumers regardless of where they bank.
Meanwhile, more than 1 in 5 use their bank’s budgeting app. If you don’t bank at a financial institution with a robust app, or even if you do, most of the dedicated apps say they offer a more comprehensive solution.
When you have a headache, you likely take an aspirin. So why don’t more people use budgeting apps, despite these tools being demonstrably linked to lower financial stress? The disconnect underscores a gap between consumers’ needs and use of solutions, in turn suggesting a misalignment in how financial tools are designed, marketed and perceived.
Whether it’s because consumers are too financially stressed to pay attention, or app providers aren’t demonstrating their value proposition — or both — there’s an opportunity for both sides.
Niche personal finance tools, such as automatic bill pay and expense tracking, are used more often, but still at low levels. Nearly 1 in 3 consumers use automatic bill payments, roughly 1 in 5 use spreadsheets to map out their spending, needs and wants, and 13% use expense tracking software.
The PYMNTS Intelligence report, based on a comprehensive survey that collected 2,040 complete responses from U.S. adult consumers between May 1-21, sheds light on the deep-seated financial anxiety afflicting Americans. It identifies a major disconnect between their personal finance needs and the solutions available, particularly within the burgeoning market for budgeting apps.
Despite persistent inflation and the impact of tariffs on everything from clothing to restaurant guacamole, not everybody is feeling financial strain equally. People with crimped pocketbooks who still manage to make things work each month dipped slightly in May to 44.2% of all consumers, from 44.7% in April. That’s still 2.5% more compared to two years ago.
But it’s consumers who truly struggle to pay their monthly bills, kicking some of them down the road, that are falling behind. Nearly 1 in 4 were in that situation in May, up from 23.5% the month prior. That’s nearly 9% more than two years ago.
Either way, financial stress is financial stress, and the data paints a stark picture of widespread discomfort: Only 4 in 10 consumers overall feel comfortable with their finances, meaning 6 in 10 are worried. While roughly as many who are not living paycheck to paycheck feel mostly comfortable, the picture changes dramatically for others.
Among those living paycheck to paycheck, fewer than 3 in 10 are comfortable if they just manage to pay their monthly bills, and a mere 1 in 10 feel comfortable if they are struggling to pay bills.
Counterintuitively, financial stress also affects higher earners: More than 1 in 2 earning over $100,000 annually are less-than-comfortable. In other words, widespread pocketbook anxiety isn’t just a vibe; it’s concrete stress experienced by most Americans.
Who’s Budgeting, and With What?
The report categorizes consumers into three budgeting types: advanced budgeters, basic budgeters, and those who don’t use any tools. Financial comfort levels vary significantly across these groups.
What’s key is that the data reveals that advanced budgeting tools can act as a powerful equalizer. Even among consumers living paycheck to paycheck and struggling to pay bills, more than half of those who are advanced budgeters report feeling comfortable with their finances. The clincher: This comfort level is notably similar for those not living paycheck to paycheck. Advanced budgeting tools can provide substantial relief, regardless of one’s financial standing.
These are among the many findings in the report, which also details the spending minefields, from impulse buying to surprise, unexpected expenses, that can wreck a budget.
Read more:
Only 40% of US Consumers Plan Their Next Financial Move
Two in Three Consumers Cut Back on Convenience Services Over Cost Concerns
Unmasking the Drivers of Paycheck-to-Paycheck Living
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