Feeling a little squeezed at the end of each month? If so, you're not alone.
Most of us are spending more since the Great Recession, but our incomes have not nearly kept pace — and that's putting a strain on family budgets, according to a new report from the Pew Charitable Trusts.
"Core expenditures, like housing, food, transportation and health care, all consumed larger shares of household income in 2014 than they did in 1996 and the squeeze is particularly acute for lower-income households," said Erin Currier, Pew's director of financial security and mobility.
For a typical family of four (two wage-earners and two children), median household income increased by about $10,000 between 1996 and 2014. But core expenditures also increased by about the same dollar amount. So while that typical family spent 71 percent of its income on core costs in 1996, by 2014 the figure was 75 percent.
"This change in the expenditure-to-income ratio in the years following the financial crisis is a clear indication of why and how households feel financially strained," the report said.
Based on an analysis of data from the U.S. Bureau of Labor Statistics, Pew found that:
- Overall median household spending grew by about 25 percent between 1996 and 2014, returning to pre-recession levels, but income growth has lagged far behind.
- By 2014, median income had fallen by 13 percent from 2004 levels, while expenditures had increased by nearly 14 percent.
- Low-income families spent a far greater share of their income on core needs than did upper-income families.
- Although all households had less slack in their budgets in 2014 than in 2004, lower-income households actually went into the red.
- Over the past two decades, spending on housing increased for all Americans, but in 2014 the typical low-income household spent far more on housing as a share of income (40 percent) than those in the middle (25 percent) or at the top (17 percent).
Little room for saving
When most of the family budget is spent on essentials, there's less room for discretionary purchases, such as entertainment or dining out. It's also difficult to set aside money for any kind of financial cushion.
"That's worrisome," Currier told NBC News. "This new report shows that many families don't have that kind of financial cushion, so while they're having trouble making ends meet day-to-day or week-to-week, they're also not prepared for the financial emergencies we know happen," Currier said.
A recent report by Bankrate.com shows just how on-the-edge many family budgets are these days. It found that 63 percent of the adults surveyed said they do not have the resources to pay for a $500 car repair or a $1,000 medical emergency without going into debt.
Income is only half the picture
Pew did this report to show policymakers that income alone does not determine household financial health. Expenditures, which are often overlooked, are an important part of a family's balance sheet.
"Looking at income is an important metric, but it doesn't tell you anything about whether a family's income is sufficient to meet its expenses," Currier said.
Mark Hamrick, senior economic analyst at Bankrate.com, told NBC News there seems to be a real disconnect in our society right now between how much people earn and the cost of living.
"Data like this helps explain the polarized nature of our political environment where we seem to have opposing forces between the haves and the have-nots," Hamrick said. "One of the most complained about aspects of this recovery has been the lack of wage growth."
For its May 2015 Financial Security Index, Bankrate asked people what they were doing with the extra money they had because of lower gasoline prices. Forty percent said they used it to pay for other necessities such as groceries and rent.
It's important to have a rainy day fund — and the time to start it is now. Financial experts say the best approach is to put your savings on auto-pilot and build that into your family budget. Have a little something from each paycheck, even if it's a small amount, automatically deposited into a savings account. If you wait until the end of the month, after all the bills are paid, you may find there's nothing left to save. It's best to keep that rainy day fund in a separate account, so you won't be tempted to touch it.