THE STRUGGLE FOR FINANCIAL COMFORT
The average American says they need to earn $233,000 a year to be financially comfortable. But in 2021, American workers on average made only $75,203 annually.
DREAMS VS. REALITY: AMERICANS’ FINANCIAL ASPIRATIONS
Americans are sort of looking at how much money they would like to have to be financially secure, and that ends up being basically three times what the average income is in this country.
FINANCIAL INSECURITY: A GROWING CONCERN
72% of Americans said they weren’t financially secure given their current finances. And more than a quarter of Americans said they’ll likely never be financially secure.
ANXIETIES AMIDST THE CHANGING FINANCIAL LANDSCAPE
By the numbers, their debt is lower and their savings are higher coming out of the pandemic, but they’re more anxious about what’s going to happen next, if they have job stability, if they’re going to be able to have a secure retirement.
PAYCHECK TO PAYCHECK: THE NORM FOR MANY
With well over half of Americans living paycheck to paycheck, many are failing to meet some of their modest financial goals.
THE COST OF AMERICAN LIVING
Americans working full-time earned a median monthly income of about $4,400 during the second quarter of 2023. The average worker takes home 75.2% of gross wages after taxes and benefits, shrinking the take-home pay to about $3,308.
THE RISING TIDE OF LIVING EXPENSES
And that just isn’t enough to cover the cost of living in America today. The cost of health care, attending college, and purchasing a home has skyrocketed, while wage growth remains stagnant.
THE BURDEN OF SHELTER: HOUSING COSTS
The median monthly rent in the U.S. is $2,029 as of June 2023, accounting for over 46% of Americans’ median pretax income. Housing is a significant concern, causing uncertainty and anxiety, especially among those under 40.
REGIONAL DISPARITIES: A CHALLENGE TO COMFORT
Americans said it would require more than $1 million in net worth to be financially comfortable in places like San Francisco, New York, and Southern California. Migration to less expensive areas is a growing trend, but even those places are becoming more expensive.
ESSENTIAL EXPENSES: THE STRAIN ON WALLETS
Americans spend on average $690.75 on food every month, significantly higher than estimated grocery bills. Coupled with out-of-pocket health expenditures, total expenses already account for 85% of median take-home pay for renters and over 82% for homeowners.
BUDGETING WOES: LACK OF FINANCIAL SAFETY NET
Budgeting experts advise Americans to spend just 50% of their net income on essentials, 30% on wants, and 20% on savings or paying off debt. However, the reality shows that many Americans cannot meet this allocation, with 75% of their take-home pay going towards needs.
INTEREST RATES AND ECONOMIC IMPACT
The Federal Reserve’s 11 interest rate hikes since March 2022 have left more than a third of Americans feeling financially uncomfortable. Higher interest rates hinder affordability for financial activities, particularly home purchases.
DEBT: A DAMPENER ON FINANCIAL SECURITY
More than 40% of Americans blame insufficient retirement funds or emergency savings for financial insecurity. Over 36% admit to having more credit card debt than emergency savings, showcasing the struggle to balance debt repayment with other financial goals.
THE MACRO AND MICRO SOLUTIONS
Public policy, such as Social Security reforms and employer-sponsored retirement savings opportunities, can greatly improve Americans’ chances of achieving financial security. However, household willingness to work toward financial security is equally crucial.
THE PATH TO FINANCIAL SUCCESS
Financial advisors recommend having clear personal and professional goals, aligning budgets with these goals, and acknowledging that financial struggles are a shared experience, not an individual failure. Budgeting remains a key tool for navigating the complex financial landscape.
CODE IS nothing
CLOSING THOUGHTS ON FINANCIAL ANXIETY
There are millions of people struggling, and it’s not something people want to talk about. If you find your financial security feeling precarious, you’re not alone, and it’s not your fault. Acknowledging and dealing with financial challenges is the first step to overcoming them.