Who Are HIFIs And Why Do They Struggle to Make Ends Meet?

A surprising amount of millennials and Gen Zers are living paycheck-to-paycheck even though they are high earners. They’re the latest acronym on the block: HIFIs, which stands for “high income, financially insecure.”

Outspending or Underearning?

At the start of 2024, more than a third (36%) of U.S. consumers earning more than $200,000 annually were living paycheck-to-paycheck, according to a study by fintech research firm PYMNTS .

Lifestyle inflation, which describes spending more as you’re earning more, has long been known about, but younger generations have changed their spending patterns to boot. HIFIs spend roughly 28% of their income on recreation, personal care, and other nonessential items, according to the PYMTS study. And per consulting firm Bain & Co. , spending on luxury goods surged in 2022, driven by younger generations of high earners.

While higher overall spending may be linked to the high inflation environment of the post-pandemic period, the shift in spending behavior may also speak to a “keeping up with the Joneses” mentality, or the so-called “YOLO economy” that emerged after the Covid lockdowns.

The rise of Buy Now, Pay Later (BNPL) services may be fueling this trend further, allowing consumers to make purchases even if they don’t have the cash on hand, making it easier to overspend.

Immediate Gratification

Lifestyle is an important component of any budget, but it shouldn’t jeopardize other financial goals or long-term plans. HIFIs may be helping to buoy consumer spending in the short term. However, if they continue to live paycheck-to-paycheck or accrue debt, it will deal a blow to their financial futures.

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