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How volatile are Americans' personal finances?
For the majority of U.S. households, monthly income and consumption fluctuate greatly.
Monthly income is volatile
- in 41% of households it fluctuates 30%+
- in 47% of households it fluctuates 5-30%
Monthly consumption is volatile
- in 39% of households it fluctuates 5-30%
- in 60% of households it fluctuates 30%+
What causes volatility?
- Months with 5 Fridays — 3 paychecks instead of 2
- Tax bills and refunds
- Year-end shopping
How do income and consumption changes relate?
Earning and spending trends move in tandem
- Income and consumption changes are within 10 percentage points of each other
- Amount of people: 28%
Spending trends outpace earning trends
- Consumption increases more than income by more than 10 percentage points
- Amount of people: 33%
Earning trends outpace spending trends
- Consumption increases less than income by more than 10 percentage points
- Amount of people: 39%
The average household doesn’t have enough of a financial buffer to weather one month of volatility.
$4,800 is the monthly financial buffer needed for a middle-income household.
- Typical liquid assets are about $3,000.
- The shortfall in liquid assets equals about $1,800.
© 2018 JPMorgan Chase & Co.
Weathering Volatility Infographic | JPMorgan Chase Institute