From social media personal finance influencers (“finfluencers”) to budgeting book guides, there’s been a recent explosion in popular money advice geared toward ordinary people. While the details vary, the basic blueprint is the same: budget carefully, build emergency savings, and plan ahead.
But there’s one common factor that makes following the blueprint nearly impossible: volatile income. It’s hard to budget when you don’t know whether next month’s paycheck will cover your basic expenses, let alone leave anything left to save.
Millions of Americans work hard but still struggle to make ends meet each month because their income bounces unpredictably up and down. That’s the takeaway from a new study by Julie Yixia Cai and Emma Curchin, researchers from the Center for Economic and Policy Research, a progressive Washington think tank. Their research reveals that having a volatile income undermines financial security for workers across all income levels.
Yixia Cai and Curchin reviewed data on the monthly incomes, costs, and debts of people of different races and annual income levels and from across the country from 2018 to 2022 to get a picture of how “economic volatility,” or a reliance on an income that goes up and down from one month to the next, aligned with other measures of economic precarity. While some racial and geographic groups have fared differently in the wake of the COVID-19 pandemic, the study found that volatility is consistently detrimental to just about everyone — even people with incomes that put them well above the poverty line.
“Volatility, in and of itself, is a problem for workers of all incomes,” the pair wrote.
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Auteur: Alex Park
