$19,800 – that’s the number the average American sees as a life-changing amount of money in 2019, according to new research.
A study exploring American finances found that more than one in five millennials (22 percent) view $5,000 or less as life-changing – an amount that would make a large impact and change in their life.
What would Americans spend this life-changing sum on? Rather than throwing the money at a vacation, a large purchase, or something frivolous – 51 percent of Americans said they’d put the money right into savings. Other uses for the cash reveal more practicality – credit debt (31 percent), starting a business (30 percent) and putting the money in a retirement account (27 percent) all made the list of top uses.
The new survey, conducted by OnePoll on behalf of Self Lender, found that 56 percent of Americans have exactly six months of savings or less – 31 percent of those respondents are on the lower end of six months’ savings, and one in four have exactly six months’ worth.
It’s clear that for a majority of Americans, life-changing money doesn’t necessarily mean winning the lottery as much as it means enough to get out of a bind.
In fact, nearly one third of Americans aren’t comfortable with their current financial situation, and 55 percent find it difficult to stick to a savings plan. American women are in a tougher situation than men – 38 percent of them reported that they aren’t comfortable with their financial health.
Less than half of American women (46 percent) believe their financial situation will improve markedly in the next five years.
On average, respondents spend approximately twelve hours a month planning their budget and finances, and roughly 21 percent of earnings are put into savings/not immediately spent on necessities.
Millennials surveyed put more than one fifth of all earnings toward debt (student or other) payments, and more than half report currently living paycheck-to-paycheck.
“Americans have more than $1.4 trillion in student loan debt yet most don’t have even $400 in cash to cover an emergency expense,” said Self Lender CEO James Garvey. “Living paycheck to paycheck makes it difficult to build savings while paying down your debts, but it’s possible with consistent effort. Even small amounts add up over time.”
Financial hardship aside, more than half of Americans (51 percent) – and 64 percent of millennials – believe they will become financially comfortable in the next five years.
In fact, 67 percent of respondents think they will obtain their selected life-changing amount of money in the next five years, through investments, income raises, and consistent saving.
Improving their credit score is a goal of many Americans, and 78 percent are currently working to do so. 38 percent of those respondents are improving their score in order to get a mortgage and buy a home.
“Whether you’re planning to get a mortgage or just working towards a good credit score, the best way to get a good credit score is to demonstrate consistent, on-time payment history,” said Garvey. “With a better credit score, you’re more likely to get lower interest rates on that mortgage for your dream home, which can save you thousands in interest expense over the years.”