The State of Finances Among Americans: Expectations and Reality
What do Americans think it takes to live comfortably?
According to a recent Bankrate survey, Americans believe they need to earn an average of $186,000 a year to live comfortably. This is a decrease of 20% from the previous year. Different demographic groups had varying income thresholds, with the exception of Gen Z respondents, who think they need to make $200,000 a year to feel comfortable or financially secure – an increase of 3.6% from the previous year.
Income thresholds decline across demographics
However, every other age group, as well as gender and racial/ethnic groups, including those with and without children, had lower income thresholds. This means that the expected income required to live comfortably decreased for most groups.
Gen Z bucking the trend
Gen Z was the only demographic group that showed an increase in income threshold, with their average income requirement for comfort and financial security going up by 3.6%. Additionally, when it comes to what it takes to be rich, Gen Z has a unique outlook, with an average required income of $461,000, a 20.7% increase from the previous year.
Financial insecurity on the rise
Despite the decrease in income thresholds, financial insecurity is on the rise. Only 25% of Americans report feeling financially secure, down from 28% the previous year. The survey also showed that 75% of Americans are not financially secure, up from 72% the previous year.
Money dysmorphia among Gen Z and millennials
Researchers have found that Gen Z and millennials are suffering from "money dysmorphia," a phenomenon where individuals fixate on the idea of being rich. An Intuit Credit Karma survey in January found that 45% of Gen Zers and millennials are obsessed with the idea of being rich, with 48% of Gen Zers and 59% of millennials feeling behind financially.
Impact on Gen Z
Despite the rising cost of living, heavy debt burdens, and historically unaffordable housing market, Gen Z is more optimistic about their financial future. They are the most likely to believe they will feel financially secure someday, with 64% thinking so. This is in contrast to the 53% of millennials, 48% of Gen X, and 26% of baby boomers who share the same sentiment.
Conclusion
The Bankrate survey highlights the differences in financial expectations among various demographic groups, with Gen Z being a standout exception. The increasing financial insecurity and money dysmorphia trends among Gen Z and millennials also raise concerns about their financial well-being and the impact on their future.
FAQs
Q: What is the average income required to live comfortably in the US?
A: According to a recent Bankrate survey, Americans believe they need to earn an average of $186,000 a year to live comfortably.
Q: What is money dysmorphia?
A: Money dysmorphia is a condition where individuals fixate on the idea of being rich, often leading to feelings of inadequacy and financial stress.
Q: Are Gen Zers more optimistic about their financial future?
A: Yes, despite financial insecurity and money dysmorphia, Gen Z is more optimistic about their financial future, with 64% believing they will feel financially secure someday.
Q: Is the cost of living increasing among Gen Z and millennials?
A: Yes, Gen Z and millennials are facing rising costs of living, debt burdens, and an unaffordable housing market, which can affect their financial stability.
Q: What is the share of Americans who feel financially secure?
A: Only 25% of Americans report feeling financially secure, down from 28% the previous year.
Author: fortune.com
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