Investment was the most common financial improvement that respondents felt they couldn’t afford (66%), followed by retirement savings (61%) and saving for emergencies (59%). In fact, a 2019 study showed that most millennials can’t save for retirement, with 55% lacking a retirement account altogether.
Sixty-five percent of women and 46% of men felt they need more money for emergencies, while 65% of women and 52% of men reported needing more money to save for retirement. When you’re just getting by, it can be hard to prioritize habits like saving and investing, but they’re easy to start and well worth it, even with modest contributions.
Can’t Afford Flexibility
With essential expenses eating up such a large portion of your budget, it can be hard to afford the things you’d much rather spend that money on.
That said, indulgences are important, and there’s a big difference between frivolous spending and enjoying the fruits of your labor.
Our study showed that there are certain things respondents felt they didn’t have enough money for, but on average, the monthly minimum people felt was necessary for nonessential spending was $626. Vacation and travel was by far the top thing that respondents felt they couldn’t afford (67%), followed by entertainment (61%) and home decor/upgrades (58%).
Considering the mental health benefits of vacations, hobbies, and time away from work to recharge, responsible spending on self care and enjoyment is arguably essential.
Insufficient Income Negatively Affects Mental and Physical Health
“Health is wealth” may be a popular saying, but there’s much more to say about the health implications of wealth. To explore this connection, I compared respondents who felt they earned enough to those who felt they didn’t.
The health implications of financial strife extend far beyond stress (challenging enough on its own) and even show impacts on physical well-being, especially at a time when many adults struggle to afford medical care, including those with insurance.
Simply put, Americans with sufficient income were far more likely to report good or excellent health. While 78% of people who earned enough reported good or excellent physical health, that percentage dropped to 48% among respondents who felt they weren’t earning enough. Not only can insufficient income keep medical care out of reach, but financial stress alone has been shown to manifest through physical symptoms.
Among respondents who earned enough money, 86% reported a high level of life satisfaction. By contrast, only 48% of people who weren’t earning enough reported the same. Even self-image and life outlook were impacted, evidenced by fewer than 1 in 4 insufficient earners feeling capable of living a fulfilling life.
A staggering 80% of those who didn’t earn enough said their well-being was negatively impacted by their financial situation. In fact, a 2021 study found that well-being increased with income even among those earning high incomes. Money isn’t everything, of course, and 37% of respondents with six-figure incomes said their financial situation had a negative impact on their well-being.
Final Thoughts
Financial prosperity is within your grasp, no matter who you are or the circumstances you’re facing.
Living beyond the basic needs of life, or even just meeting them, often feels unattainable, but small changes can make a big difference. And no, it won’t mean sacrificing everything you love. At I Will Teach You To Be Rich, we educate people of all backgrounds to help them gain the financial freedom and prosperity they deserve.
Methodology and Limitations
For this analysis, I surveyed 1,002 respondents using the Amazon MTurk platform. Survey quotas were used to guarantee sufficient respondent counts from each generation, which were as follows: Generation Z, 248; millennials, 253; Generation X, 253; and baby boomers, 248.
To help ensure accurate responses, all respondents were required to identify and correctly answer an attention-check question. In some cases, questions and answers have been rephrased for clarity or brevity. These data rely on self-reporting, and potential issues with self-reported data include telescoping, selective memory, and exaggeration.
Fair Use Statement
Whatever your finances may look like, I hope you found this study informative and insightful, and I encourage you to share it. I just ask that you link back to the findings and that your purposes are noncommercial.