Study: How consumers spend on — and after — pay day
Consumer spending increases by 33% on pay day, and remains elevated for another day before returning to normal.
That’s according to the latest data from InMarket’s 2024 Payday InSights Report, which examined the spending patterns of consumers from April 2023 to April 2024. InMarket noted that per a 2023 Payroll.org survey, 78% of consumers live paycheck to paycheck, which contributes to the surge in pay day and post-pay day spending.
On pay day, the largest spending by dollars occurs at restaurants, grocery stores and gas stations. Restaurants (+25.6%) see significant spending post-pay day, likely as consumers treat themselves to a nice dinner out. Grocery stores (+16.8%) and gas stations (9.8%) are both necessities that take top priority in replenishing once a paycheck hits.
After taking care of essentials like food and gas on pay day, the categories that see the largest increase in spending are more discretionary, like bookstores (+230%), cruises (+55%), auto (+54%) and beauty products (+51%). Other categories with significant increases include computers and electronics (+47%), furniture and home decor (+40%) and toys (+40%).
InMarket noted that spending at shops stays elevated for longer when compared to food and drink, and travel (four days for shops and two days for the other categories, respectively). InMarket says that consumers may spend at shops with leftover funds only once obligatory expenses like groceries and gas have been taken care of, or perhaps may have to travel further distances to reach their local shops, requiring an extra trip during the week. For food & drink and travel retailers, the opportunity to activate shoppers should be more concentrated on the lead-up to pay day to ensure pay day spending, according to InMarket.
In the recreation category, which includes date-specific events like concerts and sporting events as well as recurring charges like monthly gym membership fees or streaming subscriptions, consumers have less control over when this money is spent, influencing the longer elevation and irregular patterns. InMarket says this category too may be impacted by surplus funds that consumers have once necessary expenses (groceries, gas, etc.) are taken care of.
“After peaking during the pandemic, higher inflation has continued to impact household budgets and, consequently, consumer spending,” said InMarket in the report. “The importance of bi-weekly paychecks has risen to new heights as consumers work to stretch every dollar to cover higher costs for food, gas, travel and more.”