Many families across the U.S. are finding it harder to make ends meet. A concerning report reveals that a significant 70% of American households are financially unhealthy, with day-to-day financial struggles worsening for many. This article explores the 12 key reasons behind this issue.
Inflation Has Outpaced Earnings
Wages in the U.S. are not keeping up with inflation, worsening financial struggles for many Americans. Recent information from the U.S. Bureau of Labor Statistics shows that while real average hourly earnings rose slightly from $11.12 to $11.23 (a 1% increase) and real average weekly earnings increased from $382.62 to $385.34 (a 0.7% rise), these gains were outpaced by an inflation rate of approximately 2.9%.
As a result, workers’ purchasing power has declined. Nearly 78% of Americans now live paycheck to paycheck. Rising costs for essentials like housing, groceries, healthcare, and education far outstrip inconsistent wage growth.
Credit Card Dependence
According to a Clever Real Estate survey, credit card dependence is a growing challenge in the U.S., with 61% of Americans carrying an average debt of $5,875. Alarming statistics reveal that 23% of people add to their credit card debt monthly, while 14% missed payments in 2023.
Nearly half of older Americans rely on credit cards for essentials like food, housing, and healthcare, with 20% consistently using this high-interest debt every month. Rising costs are jeopardizing their financial stability and retirement security.
Housing Is Out Of Reach
Homeownership in the U.S. has become increasingly unaffordable due to soaring house prices and rising mortgage rates. Since January 2022, the annual income you need to afford a median-priced home has surged from $75,000 to $120,000.
With the national median income at just $84,000, many Americans are unable to bridge the affordability gap, leaving homeownership out of reach for the majority. Meanwhile, soaring rent prices—spiking by over 50% in several urban areas—further complicate efforts to find budget-friendly housing.
Student Loan Debt
Many Americans are weighed down by student loan debt. As of 2024, total student debt had surpassed $1.77 trillion, with 45 million people still owing money. The average borrower is $38,000 in debt, making it hard to save, buy a home, or invest in one’s future.
Even with relief programs, ballooning interest and monthly payments leave many struggling financially. In fact, student loans are now the second-highest source of debt after mortgages.
No Emergency Fund
Despite low unemployment rates, many Americans struggle to cope with unexpected expenses. Living paycheck to paycheck has become the norm.
According to a Bankrate Report, 59% of Americans don’t even have the savings to cover an unexpected $1,000 emergency expense in 2025. Rising debt, limited savings, and issues like wage inequality leave individuals exposed to financial shocks that turn routine unexpected costs into potential crises.
High Healthcare Costs
High healthcare costs in the US create a major financial burden, even for insured individuals. High premiums, deductibles, and out-of-pocket expenses often lead individuals to delay necessary medical care.
Just one medical emergency can wipe out years of savings or force someone into debt. The staggering $220 billion in collective medical debt affecting approximately 14 million people highlights the devastating economic impact of illness. In the U.S., about 14 million adults (6%) owe over $1,000 in medical debt, and roughly 3 million adults (1%) owe more than $10,000.
Not Saving For Retirement
While most Americans know they need to save for their retirement, many struggle to do so. According to a new AARP survey, one in five Americans aged 50 and older have no retirement savings, and over 61% worry about running out of money during retirement.
Data from the U.S. Census Bureau shows that nearly 50% of Americans aged 55 to 66 lack savings, and women are slightly more affected than men. Since 65-year-olds are expected to live another 20 years, a lack of savings puts their financial stability at risk and makes retirement more challenging.
Soaring Transportation Costs
Transportation costs in the U.S. are significantly high, with households spending an average of $12,295 annually in 2023. This is mostly due to heavy reliance on personal vehicles and inefficient public transit infrastructure.
For many, owning a vehicle is a necessity, not a luxury, with expenses like maintenance, fuel, insurance, and loan payments eating into household income. Poor public transportation and inadequate funding make commuting even more costly, especially for those in vulnerable communities. These factors strain budgets, turning transportation into a major financial challenge.
Financial Strain Of Parenting
The high cost of raising children has become a significant financial challenge for many Americans. Childcare expenses alone can rival mortgage payments.
Additional housing, food, healthcare, and education leave family budgets stretched thin, forcing parents to work longer hours, take on extra jobs, or even skip meals to make ends meet. With the average yearly cost of raising a child at $21,681, this financial strain highlights the growing difficulty in achieving economic stability.
Gig Economy Jobs Lack Financial Security
The gig economy provides flexible work opportunities and supplemental income for many Americans, but it lacks essential stability. Gig jobs often exclude benefits like health insurance and retirement savings, making long-term financial planning difficult.
Inconsistent earnings also make budgeting difficult. Gig workers struggle to achieve financial security despite their efforts to cover immediate expenses.
Rising Cost of Food
The rising cost of food has created significant financial challenges for many Americans. Since 2019, food prices have increased by nearly 30%, outpacing wage growth and making basic groceries unaffordable for some households.
Staples like eggs, milk, and meat have become especially costly, and even fast food is no longer a budget-friendly option. As a result, many families are forced to cut meal portions or rely on food banks, highlighting the financial strain caused by escalating grocery expenses.
Impulse Buying
Impulse purchases are a major cause of financial issues for many Americans. A recent NerdWallet survey revealed that over 22% of Americans have made impulsive purchases in the last year that have seriously affected their finances.
Social media ads, influencer promotions, and discount emails often lead to unplanned spending. Over time, these impulsive habits can drain budgets, destroy savings, and create financial instability. Setting boundaries, like unfollowing triggers or unsubscribing from promotional emails, can help curb impulse buying and improve financial health.
