What exactly does living paycheck to paycheck look like?
Many may picture those with low incomes struggling to make ends meet each day, with even planned expenses often not covered by their earnings. But there’s more to the story when it comes to financial vulnerability. It’s not always about one’s income but rather whether they have access to money when they need it.
For beauty brands and retailers, this creates an important distinction. While consumers may seem financially stable on paper, they might lack the liquidity to handle unexpected expenses. This reality shapes how they prioritize nonessential purchases, including beauty and wellness products.
According to The 2026 Cash Poor Report: The True Cost of Living Paycheck to Paycheck, developed in partnership with Opinium Research, Morgan State University, and the Global Black Economic Forum, a lack of liquidity is a major concern.
One in five households living paycheck to paycheck earns more than $75,000 annually, yet two in five have less than $200 available in their checking and savings accounts. For many Americans, a stable, full-time job is not enough to provide a financial cushion, with nearly half relying on side hustles for additional support.
This highlights that household income isn’t necessarily a reliable measure of purchasing power, as spending decisions are often determined by available cash rather than salary alone. In other words, despite actively working and contributing to society, individuals who are cash-poor are still unable to build a financial cushion.
There is also an issue in the declining viability of borrowing money, with the options that remain becoming increasingly more expensive.
Those who identify as cash poor span various demographics, with the majority being millennials or Gen X, while women make up just over half of the cash poor population. Additionally, many respondents reported managing chronic health conditions or disabilities that make saving extra cash difficult. But financial vulnerability isn’t evenly distributed. Communities that have historically faced systemic barriers to accessing credit and capital remain disproportionately susceptible to economic hardship and are often less able to recover from financial shocks.
Financial strain is often driven by unplanned expenses. Although the cost of everyday essentials remains high, financial stress often comes down to one or two unexpected expenses a year, with medical bills (33%), utility bills (25%), and auto repairs (24%) ranking among the most common. Only about a quarter of cash poor Americans were able to fully cover these types of expenses with either savings or a credit card alone, with the majority relying on short-term solutions such as borrowing from friends or family.
While borrowing appears to be declining on paper, the data suggests this is not a sign of improving financial health. In fact, subprime credit cards are the most widely used form of borrowing, but they’re also the most expensive, costing consumers an estimated $17.4 billion per year. Lower-cost fintech solutions, including cash advances, “Buy Now, Pay Later” purchases, and peer-to-peer (P2P) lending remain significantly less expensive. Yet their use has also declined, suggesting that consumers aren’t borrowing less because they no longer need help, but because they have fewer viable options.
Beyond borrowing costs, many consumers struggle to access credit in the first place, with 31% of respondents reporting that they had been denied access to a basic bank account. The consequence? People accumulate greater financial hardship over time by delaying repairs, postponing healthcare, or foregoing other essential needs. The report maintains that the true cost of financial insecurity extends well beyond interest rates or borrowing fees.
For brands, this reinforces the idea that consumers aren’t necessarily spending less out of a lack of interest but because they lack the financial flexibility to cover unexpected expenses.
The report also suggests that the US financial system is becoming less affordable and less accessible to the everyday consumer. Although inflation eased from its peak during 2025, with some signs of improvement in the broader economy, many households continue to face elevated costs without the financial cushion needed to manage unexpected emergencies.
Improving financial resilience will ultimately require more than simply reducing borrowing costs. Expanding access to safe, affordable credit, strengthening financial education, and supporting better lending solutions will be critical to helping households build long-term stability and manage unexpected expenses.
For the beauty industry, this is a reminder that financial resilience, not just income, is becoming a defining factor in consumer behavior. As brands seek to understand the future of beauty spending, liquidity is becoming an important and often overlooked indicator of consumer behavior.
