Key Points:
- A recent PYMNTS Intelligence report reveals a dramatic shift in the financial habits of households earning over $100,000 annually.
- More than half of all individuals in these high-income households now manage their finances “reactively,” a 25% decrease in “planners” since February 2024.
- This trend is driven by a combination of lifestyle creep, rising living costs, inflation, and new tariffs impacting luxury goods.
- The shift has led to increased reliance on credit, fueling demand for reward-based credit cards and Buy Now, Pay Later (BNPL) services, even for splurges.
It’s a common assumption that a six-figure income guarantees financial stability and a well-planned future. However, new data reveals a startling and counterintuitive trend: a growing number of high-earning Americans are struggling to manage their money, shifting from a forward-thinking approach to a reactive, bill-to-bill existence heavily reliant on credit.
According to a recent PYMNTS Intelligence report, more than half of all individuals in households earning over $100,000 have become “reactors” when it comes to their finances. This represents a staggering 25% decline in the share of “planners” within this demographic since just February 2024. With nearly 4 in 10 U.S. adults living in such households, this shift affects approximately 139 million consumers and has significant implications for the broader economy and the payments industry.
The Two Financial Mindsets: Planners vs. Reactors
The report establishes two distinct financial personas: planners and reactors. The differences in their approaches are stark.
Planners take a proactive, long-term view of their finances. They are characterized by their commitment to spending within their means, consistently paying off credit card balances, and prioritizing savings and retirement. Typically, a planner maintains a credit card balance below $2,000, has at least $2,500 in cash savings, and allocates an average of 12% of their monthly budget to savings and investments. For nearly three in ten planners, saving for retirement is their top priority.
In contrast, Reactors live in the financial present. They often struggle to pay off their monthly credit card balances, carry balances exceeding $2,000, and have less than $2,500 in savings. Faced with an emergency, a reactor would likely have to resort to credit or other forms of lending. Their focus is on immediate needs, with 30% prioritizing debt repayment over long-term goals. They allocate a much smaller portion of their income—just 5.6%—to savings and investments.
Why Are High Earners Feeling the Pinch?
While it’s understandable that lower-income households may fall into the reactive category out of necessity, the data shows this shift is now more pronounced among high earners than in middle or low-income brackets. Financial experts point to several converging factors.
‘I SHOULD Be Able to Afford This’
One of the primary drivers is “lifestyle creep,” a phenomenon where spending increases as income rises. Many wealth managers suspect that spending habits formed during the post-pandemic boom have been difficult to rein in, even as economic pressures mount. Edward “Scooter” Thomas III, a certified financial planner, noted that many high-end clients amassed extra cash during the pandemic and unleashed their spending when the economy reopened. Now, facing inflation and tariffs on luxury goods, they continue to spend.
“Now I think there is some level of, ‘Well I SHOULD be able to afford this,’ and those people are biting off more than they can chew because it is truly out of their current price range,” Thomas said. This sentiment is echoed by other financial planners who see clients making substantial incomes yet failing to save, like one doctor who spent $2,000 a month on shoes instead of saving for a down payment on a home.
Beyond discretionary spending, rising essential costs are also a factor. Michael Pumphrey, a certified financial planner, cited increasing property taxes, homeowner’s insurance, and medical costs as key pressures. Even home repairs cost more at a higher income level—a new roof on a seven-figure home is far more expensive than on a modest one.
Bigger Incomes, Bigger Bills, and Broader Implications
This behavioral shift has a direct impact on the payments industry. As wealthier consumers increasingly rely on credit for both essential and discretionary purchases, they drive higher interchange and processing fees for companies like Visa, Mastercard, and PayPal. In turn, this fuels demand for credit products that offer rewards and flexible payment plans, such as Buy Now, Pay Later (BNPL). Prior PYMNTS data showed that over 60% of Americans earning more than $100,000 use BNPL to splurge on everything from designer clothes to vacations.
The story here isn’t that high-income Americans are becoming poor. It’s that they are grappling with the same challenges of spending and financial planning as everyone else, just at a higher price point. By trading long-term planning for short-term reacting, they are fundamentally altering how money moves through the economy and reshaping the demand for financial products.
Image Referance: https://www.pymnts.com/consumer-insights/2025/the-secret-financial-life-of-six-figure-households/
