I'm a Financial Advisor: This Is Why Even My Stable Income Clients Are Falling Behind
Despite headlines full of economic doom and gloom, you might assume you’re safe from falling behind financially — after all, you have a stable income. The people who are truly vulnerable, you tell yourself, are likely cobbling together earnings from multiple gigs. You feel for them. Couldn’t be you.
Or could it?
Financial advisors and other money experts are sounding the alarm: Even households with steady paychecks are increasingly at risk of falling behind. Between external pressures like inflation and interest rates — and internal habits such as assuming stability simply because you’re employed — you could be more vulnerable than you realize.
MoneyLion spoke with two experts who are seeing this phenomenon firsthand: J.R. Faris, president and CEO of Accountalent, and Ryan McCallister, president and founder of F5 Mortgage.
Bills Increase — Even as Earnings Don’t
Faris describes the growing disconnect between rising living costs and relatively flat wage growth as a quiet trend among households earning in the mid-six figures.
For You: 7 Ways To Tell If You’re Rich or Middle Class — It’s More Than Your Paycheck
Learn More: Meet Your Complete Financial Toolkit. Budget, Build Credit and Track Your Money — All In One Place
“Approximately six in 10 stable-income households are ending each quarter with less cash than planned, even though their income hasn’t declined,” he said. “The deficit shows up as skipped savings transfers, stagnant balances and expenses pushed into the following month.”
In other words, middle-class families can cover their regular bills, but they aren’t building much momentum beyond that.
It’s Getting Harder To Afford Necessities
McCallister agrees that people with stable incomes are struggling more financially, in large part due to wage stagnation. Compounding the problem: The fastest-rising costs are nonnegotiable expenses.
“The math has changed,” he said. “What were once manageable expense categories — rent, property taxes, insurance and food — now take up a much larger share of an individual’s budget, leaving less room for savings or investment. Even people with strong, stable incomes are living on tighter margins than they realize.”
Higher Interest Rates Are a Factor
Not long ago, a $180,000 salary could comfortably support debt repayment, savings and discretionary spending. According to Faris, higher interest rates have upended that equation. He points to housing and credit card debt as prime examples.
“A 3% mortgage resets to 6.5%, and credit cards start draining bank accounts to the tune of $900 a month,” he said.
McCallister sees the impact up close among homeowners and buyers who assumed their stable incomes would insulate them.
“With mortgage rates around 7%, people don’t have the same flexibility they did when rates were lower,” he said.
Without that flexibility, many households remain stuck in the same financial routines — but with less room for error. As if that weren’t enough, taxes add another layer of strain.
“Another 5% to 7% of usable income disappears through bonus withholding, SALT caps and benefit phaseouts, often without much notice,” Faris said.
Inflation Doesn’t Help — Neither Do Certain Habits
Inflation has hit many Americans hard, including those with stable paychecks. But Faris says certain behaviors can further tighten the squeeze.
“Many earners now spend 65% of their take-home pay on fixed expenses, up from about 50% five years ago,” he said. “Subscription creep, financing convenience and deferred maintenance all add up. The income feels solid, but liquidity dries up.”
The takeaway, Faris says, is stark: A regular paycheck doesn’t always equal financial stability.
“The visibility of cash is more important than gross income,” he said. “Ignoring that distinction can leave even diligent earners falling behind.”
The Bottom Line
Even if you’re working hard and earning a steady income, you’re not immune to financial vulnerability. Rising costs for essentials, higher interest rates and inflation can quietly erode your financial footing. Paying attention to cash flow — not just income — and adjusting habits early can make the difference between staying stable and slowly falling behind.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
More From MoneyLion: