Skip to main content

NEW YORK (TheStreet) -- A new study by the JPMorgan Chase Institute finds that  individuals at all income levels have experienced high levels of income volatility, and even higher levels of spending volatility.

The study found 70% of individuals experienced an annual change in income of at least 5% between 2013 and 2014, 26% experienced at least a 30% change and 30% saw consistent income between 2013 and 2014.

The study found that spending was even more volatile than income -- 84% of individuals experienced monthly changes of at least 5% over the course of 2013 and 2014, 16% saw consistent spending between 2013 and 2014, while 24% of people experienced more than a 30% change in annual spending during that period.

"You could see you income drop at the same time you have a necessary increase in consumption, like a health care bill or a car breakdown," said Diana Farrell, president and CEO of the Institute. "That exposes people to a real liquidity crunch, a cash flow crunch and we've found people have not saved enough to withstand that volatility."

According to the study, a typical middle-income household needed a financial buffer of approximately $4,800 in liquid assets -- roughly 14% of annual income after taxes -- to sustain the typical monthly fluctuations in income and spending observed during the time frame. But they had only $3,000 in liquid holdings. Similar gaps exist between the buffer needed and actual liquid holdings for individuals across all incomes, except the top income earners.

The Institute's research drew from detailed transaction information for nearly 30 million Chase customers. The JPMorgan Chase Institute is a recently formed global think tank that aims to deliver better data, analyses and expert insights designed to address global economic challenges.