NEW YORK (MainStreet) — Americans are showing signs of strength when it comes to their finances, a new study says.

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According to the American Payroll Association, two-thirds of employees live paycheck to paycheck, a 1% drop from last year and 4% lower than three years ago.

The study asked over 27,000 respondents how they would fare should their paycheck face a delay for seven days.

The inability to save amounts to two simple factors: too much spending or insufficient income.

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There’s no magic to saving money. You either have to spend less or earn more. Consumers have been grappling with

higher prices at the grocery store

and in other areas of their budget, while wage growth has been unimpressive since the recession, making living paycheck to paycheck unavoidable for many.

"We continue to see a very positive trend for America's workers and their families," said Dan Maddux, executive director of the American Payroll Association. "Since 2011, we've seen a steady decline in the number of people who would struggle to pay their bills if their paycheck were delayed for a week."

Other research suggests the frugal habits many consumers were forced to adopt on the heels of the 2008 recession are sticking.

As MainStreetreported in May, 88% consumers said the quality of generic and national brands were the same. In another report, some 96% of consumers use coupons.

Financial hardship, whether stemming from broader economic unrest or on the heels of an unexpected medical bill, can strike at any time. Maintaining frugal habits is especially important when your financial situation is stable, as it allows a cushion of savings to accumulate.

Recent research sheds light on just how dire some consumers’ savings situation is, with 26% of Americans having no money in an emergency savings account.

“Fewer consumers living paycheck to paycheck suggests they feel increasingly confident about the state of the American economy,” said financial expert Gail Cunningham with the National Foundation for Credit Counseling.

Aside from the importance of saving, consumers with some extra money leftover each month have some more room to spend, which is an encouraging sign for the economy.

Consumer strength will be tested during the fast approaching holiday shopping season, a critical time for retailers and manufacturers who stand to benefit from an uptick in spending, among other industries.

- Written by Scott Gamm for MainStreet. Gamm is author of MORE MONEY, PLEASE.

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