Board of Governors of the Federal Reserve System

Income and Expenses

A sizeable share of adults said their family's monthly income increased in 2024 compared with a year earlier. However, the share of adults who said their spending increased from the prior year was even greater. Although most adults said that changes in prices they paid compared with the prior year had made their finances worse, the share saying so declined compared with 2023.

The share of adults who said they spent less than their income in the prior month edged up from 2023, suggesting that more adults have margin in their family budgets. Measures of difficulties covering expenses—including not paying all bills in full, sometimes or often not having enough to eat, and skipping medical care because of cost—were similar to 2023.

Level and Source of Income

In this report, income is defined as the cash income from all sources that respondents and their spouse or partner received during the previous year ("family income"). Nineteen percent of adults had a family income below $25,000, and 39 percent had a family income of $100,000 or more (figure 15).²⁶

Although labor earnings were the most common source of income, many people had other sources of income as well. Two-thirds of adults and their spouse or partner received wages, salaries, or self-employment income (collectively referred to here as "labor income") during the previous year. Fifty-five percent of all adults received non-labor income in 2024. (See table 13 for the full list of non-labor income sources considered).²⁷ Among those with labor income, half had some form of non-labor income as well.

Table 13. Sources of income

Income Variability

The total level of yearly income may mask changes in income from month to month, and mismatches between the timing of income and expenses can lead to financial challenges.²⁸ In 2024, most adults had income that was roughly the same each month, but 29 percent had income that varied at least occasionally from month to month, similar to previous years.

Income variability was related to the ways people generated income. Adults who performed gig work were more likely to report their income varied from month to month. Forty-one percent of adults who did any gig activities in the prior month said their income varied at least occasionally from month to month, compared with 26 percent of adults who had not done any gig activities.²⁹ (See the "Employment" section of this report for additional discussion of gig activities.)

Those who were self-employed were also particularly likely to report income variability. Fifty-nine percent of self-employed adults said their income varied from month to month. Among those who worked for someone else in the month before the survey, a far lower 28 percent reported income variability.³⁰

Income variability was far less common among current retirees. Seventeen percent of retirees said their income varied from month to month, whereas 34 percent of non-retirees said their income varied. A large share of retirees received income from Social Security, and many also had income from pensions and from interest, dividends, or rental income. All of these income sources are associated with less income variability. (For more on retiree income sources and financial well-being, see the "Savings and Investments" section of this report.)

Monthly variations in income caused financial hardship for some families. In 2024, 11 percent of adults reported they struggled to pay their bills in the prior 12 months because their income varied, up slightly from 10 percent in 2023.

The likelihood of experiencing income variability and related hardships differed by income, race, and ethnicity. Adults with lower family income were more likely to experience hardships caused by varying income. Nineteen percent of adults with income of less than $25,000 said they had difficulty paying bills in the past year because their income varied, compared with 3 percent of adults with income of $100,000 or more (table 14). Black and Hispanic adults were more likely to experience income variability and related hardships, compared with White and Asian adults.

Table 14. Varying income and related hardship (by family income and race/ethnicity)

Changes in Income, Spending, and Prices

While short-term fluctuations in income can cause hardships, changes in overall income and spending over time have implications for family finances as well. In 2024, 32 percent of adults said their family's monthly income increased from a year earlier, while a higher 37 percent increased their monthly spending (figure 16).

This is the third consecutive year that the share who said their monthly spending increased was higher than the share who said their monthly income increased. The share who said their monthly expenses had increased was essentially unchanged from 2023, but down from a high in 2022. A slightly lower share of adults said their monthly income increased in 2024 than in the prior year.³¹

Rising prices contribute to increases in spending, and most adults said that price increases in the past year made their financial situation at least somewhat worse. Sixty percent said that changes in the prices they paid compared with the prior year had made their financial situation worse, including 17 percent who said price changes had made their financial situation much worse. This compares with 5 percent who said that price changes compared with the prior year had made their financial situation better. Thirty-six percent of adults said overall changes in the prices they paid had little to no effect on their financial situation in the last year.

The share who said that price changes made their financial situation worse was somewhat higher among adults with income of under $100,000 (table 15). White and Hispanic adults, adults with a disability, middle-aged adults, and parents living with their children under age 18 were also more likely to say that changes in prices they paid compared with a year ago had made their financial situation worse. Yet, since 2023 the share of adults who said that price changes made them worse off financially decreased across a broad range of demographic groups.

Table 15. Changes in prices paid compared with last year made financial situation worse (by demographic characteristics)

Most people adjusted behaviors in response to higher prices. The most common actions were spending changes, including switching to a cheaper product (63 percent of adults), using less of or stopping using a product (61 percent), or delaying a major purchase (46 percent) (table 16). Forty-three percent of adults reported they reduced savings. Increasing borrowing was less common, as were activities to generate additional income, such as working more or asking for a raise.

Table 16. Actions taken in response to higher prices in the prior 12 months (by year)

Overall, 79 percent of adults took some action in response to higher prices—unchanged from 2023, but down from 83 percent who reported taking action in 2022. Compared with that seen in 2022, people were less likely to report that they had reduced savings or taken spending-related actions such as using less of a product or delaying a major purchase.

Spending Relative to Income

A slight majority of adults spent less than their income in the month before the survey, suggesting they had some margin in their family budgets. Fifty-one percent of adults reported spending less than their income in the past month, up from 2022 and 2023, but below the levels in 2020 and 2021 (figure 17). Nineteen percent of adults said their spending exceeded their income, while the remainder (30 percent) said their spending and income were about the same.

Lower-income adults were less likely to say they spent less than their income in the past month, likely reflecting their more limited budgets. Thirty-two percent of adults with family income less than $25,000 said their spending was less than their income, compared with 66 percent of adults with income of $100,000 or more (figure 18).

In general, people who experienced economic hardships had more difficulty fully covering their expenses with their income. While 51 percent of all adults said their monthly spending was less than their income, those who experienced hardships were less likely to say so. Forty-three percent of those who had a major unexpected medical expense and 33 percent of those who experienced a layoff in the prior 12 months said they spent less than their income in the month before the survey. While economic hardships like these can make it more difficult for any family to cover their expenses, previous research also found that financial shocks were more common among those who already had a relatively small financial cushion.³²

Adults who lacked a margin between their spending and their income were more likely to take action in response to higher prices. Among adults who said their spending exceeded their income in the month before the survey, 92 percent took at least one action in response to higher prices. Among those whose spending was less than their income, a lower 71 percent took at least one action.

Bills and Regular Expenses

A key measure of a person's financial situation is whether they can afford to pay their regular bills. Seventeen percent of adults said they did not pay all their bills in full in the month prior to the survey, unchanged from 2023.³³

Lower-income adults reported more struggles with monthly bills. In the month prior to the survey, 34 percent of adults with a family income less than $25,000 did not pay all their bills in full, compared with 7 percent of adults with a family income of $100,000 or more (table 17). Younger adults, Black and Hispanic adults, adults with a disability, and parents living with their children under age 18 were also less likely to have paid all their bills in full in the prior month.

Table 17. Did not pay all bills in prior month (by demographic characteristics)

Renters were more likely than homeowners to say they did not pay all their bills in the prior month (table 18). In part, this reflects that renters have lower incomes than homeowners, although even for those with similar incomes, the share of renters who did not pay at least one bill exceeded that for homeowners.³⁴

Table 18. Types of bills not paid in full last month (by homeownership status)

Those who did not pay at least one bill in full were asked about several specific bill types. Of these, the most common types of bills not paid in full were a water, gas, or electric bill (5 percent) or a phone, internet, or cable bill (5 percent). Across each of these bill types, renters also had higher rates of nonpayment.

Food Sufficiency

Inability to afford food is a particularly severe hardship. Seven percent of adults said that members of their household sometimes or often did not have enough to eat in the prior month, referred to here as "food insufficiency." An additional 27 percent of adults said that members of their household had enough to eat in the prior month but not always the kinds of food they wanted to eat.³⁵ The share of adults experiencing food insufficiency was unchanged from 2023.

Nineteen percent of adults with a family income less than $25,000 said members of their household sometimes or often did not have enough to eat in the past month, as did 11 percent of those with a family income between $25,000 and $50,000 (table 19). Younger adults, Black and Hispanic adults, adults with a disability, and parents living with their children under age 18 were also more likely to report food insufficiency in their household in the prior month than other adults.

Table 19. Sometimes or often did not have enough to eat in the prior month (by demographic characteristics)

Health-Care Expenses

Forgoing medical treatment can be another reflection of financial hardship. Twenty-eight percent of adults went without some form of medical care in 2024 because they could not afford it, similar to the share in 2023 but up from 24 percent in 2021 (figure 19). Dental care was the most frequently skipped, followed by visiting a doctor (table 20). Some people also reported skipping prescription medicine, follow-up care, or mental health visits.

Table 20. Forms of medical treatment skipped because of cost in the prior 12 months

The likelihood of skipping medical care because of cost was strongly related to family income. Among those with family income less than $25,000, 41 percent went without some medical care because they could not afford it, compared with 14 percent of adults making $100,000 or more.

Unexpected or large medical expenses can be a particular financial hardship for families. Twenty-three percent of adults had major, unexpected medical expenses in the prior 12 months, with the median amount between $1,000 and $1,999. Seventeen percent of adults had debt from their own medical care or that of a family member (not necessarily from the past year). The share with outstanding medical debt has ranged from 15 to 18 percent each year since the question was first asked in 2019.

Health insurance is one way that people can pay for routine medical expenses and protect against the financial burden of large, unexpected expenses. In 2024, 92 percent of adults had health insurance, similar to that seen each year since 2016, but up from the 85 percent who reported having health insurance in 2013 when the survey began.

Those without health insurance were more likely to forgo medical treatment because they could not afford it. Among the uninsured, 45 percent went without medical treatment because they could not afford it, compared with 26 percent among the insured.

 

References

 

 26. In the 2024 SHED, income is reported in dollar ranges rather than exact amounts. The income distribution in the 2024 SHED is broadly similar to that from the 2024 March Current Population Survey. However, the SHED has a lower share with income less than $50,000 and a higher share with income of $50,000 or more. These deviations in the estimates may result from differences between the surveys in how income questions are asked. Return to text

 27. Non-labor income does not include tax credits such as the Earned Income Tax Credit or in-kind benefits. Details on these sources are available in appendix B of this report. It also does not include the small number of respondents who reported receiving income but did not specify the source. Return to text

 28. For additional information on monthly income variability, see Jonathan Morduch and Julie Siwicki, "In and Out of Poverty: Episodic Poverty and Income Volatility in the U.S. Financial Diaries," Social Service Review 91(3) (2017): 390–421, https://www.jstor.org/stable/26463105. Return to text

 29. Income variability for gig workers can be related to the gig activities themselves and to other aspects of these workers' financial situations. For example, 49 percent of gig workers said they wish the pay was more consistent, and 31 percent said that without gigs they would have trouble making ends meet (table 6). Return to text

 30. Forty-seven percent of those who were self-employed reported some gig activities in the prior month, as did 21 percent of those who worked for someone else. Excluding those who did gig activities, adults who were self-employed still were more likely to report their income varied from month to month (56 percent) compared with those who worked for someone else (26 percent). Return to text

 31. The large share of adults who experienced increases in their income from year to year is consistent with findings based on Internal Revenue Service tax records data from Jeff Larrimore, Jacob Mortenson, and David Splinter, "Earnings Business Cycles: The Covid Recession, Recovery, and Policy Response," Journal of Public Economics 225 (September 2023): 104983, who also note that this is not unique to recent years. Return to text

 32. Analysis of a subset of respondents in the 2019 and 2020 surveys showed that adults who were laid off during the pandemic entered the year with more limited financial resources to weather an economic downturn compared with adults overall. In addition, those who were laid off during the pandemic and were not working at the time of the 2020 survey saw a deterioration in their finances compared with the prior year. See box 1 in Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2020(Washington: Board of Governors, May 2021), https://www.federalreserve.gov/publications/files/2020-report-economic-well-being-us-households-202105.pdf. Return to text

 33. The bill payments question was revised in 2023, and results are not directly comparable to prior years. In this report, adults who did not pay all their bills in full are those who (1) did not pay a credit card bill or made less than the minimum payment last month or (2) did not pay another type of bill in full last month. In earlier surveys, respondents were asked about their expected ability to pay all their bills in full this month, and the question did not specify what paying in full meant for credit card bills. Return to text

 34. For details on the different income levels of owners and renters, see Phil Thompson, "From Size of Homes to Rental Costs, Census Data Provide Economic and Lifestyle Profile of U.S. Housing," America Counts Stories (Washington: United States Census Bureau, June 29, 2023), https://www.census.gov/library/stories/2023/06/owning-or-renting-the-american-dream.html. Return to text

 35. The U.S. Department of Agriculture (USDA) defines food insufficiency as sometimes or often not having enough to eat, and marginal food insufficiency as having enough to eat but not always the kinds of foods they wanted to eat. See the USDA Economic Research Service at https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-u-s/measurement/. The SHED food insufficiency question is similar to questions fielded on the Census Household Pulse survey and the annual Current Population Survey Food Security Supplement (CPS-FSS), although the reference periods are different. Return to text