Only a third of Americans feel financially free, but how they define that freedom varies greatly, according to a new survey conducted by OnePoll and commissioned by Experian.
2,000 adults across all generations most frequently defined financial freedom as being debt-free (54%), having a large emergency fund (33%), or being able to pay bills without worrying for six months (33%). A quarter said they’d be happier just not having to spend so much time worrying about money.
But the question dug deeper: Time is money, and the majority of Americans believe that an average day outside of work is worth $134. This amount was calculated by tallying up respondents’ estimates of the value of time spent cleaning, cooking, and driving. The average person spends about $35 per day.
Nearly four in 10 people say they wish they had another source of income, estimating that an extra $270 per day would make them financially stable. Without a side hustle, that’s like hoping your boss will approve a $34 per hour raise.
Of the 48% who feel financially constrained, 42% wish they didn’t have to stick to a budget every month, 38% still monitor their bank account before and after making purchases but would like to stop doing so, and 29% would like to have a “good” credit score (29%).
What does financial freedom mean?
Currently, the average American makes about $65,000 a year, just two-thirds of the average salary needed to feel financially free ($102,950.10).
This may be why only 21% of financially constrained respondents actually harbor hope of eventually being free. These respondents estimate that they will be free 10 years before retirement age, around age 54.
“While the definition of financial freedom varies from person to person, the common thread is that people want to live more financially empowered lives,” says Christina Roman, consumer education and advocacy manager at Experian. “Financial literacy is key to achieving this, and having access to trusted tools and resources is the first step to increasing your financial knowledge and addressing your personal situation.”
Financial literacy is a fundamental tool for managing personal finances. It involves understanding how money works, how to manage it, and how to grow it. Gaining knowledge about personal finances through trusted resources allows individuals to make informed financial decisions.
While there are plenty of places online where you can get free financial help and education, it’s always best to seek professional help, especially when it comes to understanding the reasons behind your spending habits and planning for the future.
Debt burden and financial constraints
The survey also looked at the debt Americans have. A quarter have no debt at all. Nearly half (47%) have a credit card balance. Shockingly, only 23% have a mortgage or mortgage on their home, with auto loans and medical debt rounding out the top five.
The road to paying off debt is not short: Respondents who are in debt estimate it will take them an average of six years to pay off their debt, and 7% of respondents strongly feel their debt will last longer than they do.
The average American thinks about debt and finances about 120 times each month, or about four times per day. This worry impacts how many Americans manage their finances.
Three in five respondents said they have become more cautious about their spending habits over the past five years, in part because they are saving up for bigger purchases like a car or a down payment on a house. Home improvements and family vacations are also common reasons for thrifting and saving.
The average respondent believes they will be able to make these purchases within the next four years.
Steps to a Financially Free Future
In 2024, Americans are taking steps toward financial freedom, such as working to pay off debt (58%), cutting back on non-essential spending (50%), and putting money into a savings account each month (42%).
“Financial freedom is a marathon, not a sprint, and there’s no one-size-fits-all approach,” explains Roman. “Whether it’s managing existing debt, building credit, or saving for a home, it’s important to explore and identify steps you can take to stay financially independent and on the path to reaching your goals. No matter where you are in your financial journey, there are resources for consumers who want to improve their financial situation.”
While the path to financial freedom is unique and requires perseverance, strategic planning, and ongoing learning, understanding and applying the principles of financial management can help Americans improve their financial situation and get closer to realizing their financial goals.
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This article was produced by Media Decision and distributed by Wealth of Geeks.
