Survey: Almost 50% of Americans Consider Themselves ‘Broke’ (2024)

Two-thirds of Americans Say They Are Living Paycheck to Paycheck

Feeling broke can mean different things for different people. To understand what makes someone feel this way, we dug into the financial situations of those who consider themselves financially insecure. And while we discovered many feel having a financial cushion is an important part of financial security, a significant number of Americans feel they are barely making enough money to get by.

Nearly two-thirds (66.2%) agreed they are living paycheck to paycheck, meaning they could not pay their bills or adequately manage their finances if they were to become unemployed.

This financial situation, in particular, was common among Americans who considered themselves to be “broke,” with 92.1% of this subsect reporting that they were living paycheck to paycheck.

Financial insecurity also varied by gender. Females are more likely to consider themselves “broke” than males, with 55.8% of women and 41.1% of men agreeing they feel this way.

Americans Need $17,430 in Savings To Feel Financially Secure

So what does it take to feel financially secure? Our survey found that Americans need an average of $17,430 in savings to feel like they are in a good financial position.

The answer varied by generation, however, with older generations needing a higher amount in savings to feel financially secure. Baby boomers reported needing $19,979 in savings, compared to $19,284 for Gen X, $16,252 for millennials and $14,569 for Gen Z.

We identified generations using guidelines by the Library of Congress:

• Baby boomers: Born between 1946 and 1964, now between the ages of 60 and 78
• Gen X: Born between 1965 and 1980, now between the ages of 44 and 59
• Millennials: Born between 1981 and 1996, now between the ages of 28 and 43
• Gen Z: Born between 1997 and 2012, now between the ages of 12 and 27

The personal savings rate, or the percentage of an individual’s income after monthly spending and taxes, was 3.8% as of January 2024, according to the U.S. Bureau of Labor Statistics. The median amount in savings accounts per family is just $8,000, according to the Federal Reserve.

Meanwhile, the so-called 50-30-20 budgeting rule suggests about 20% of your monthly income should go to savings – showing a significant disconnect between broad financial advice and how much is really being saved.

Additionally, the country’s total household debt is at an all-time high – more than $17.5 trillion, according to the Federal Reserve Bank of New York. High mortgage, student loan and credit card payments likely also contribute to low savings and a feeling of financial insecurity, according to our findings.

How Much Do You Have To Make In America To Feel Okay?

Average wages also likely play a large role in this common feeling of being “broke,” according to our research. When asked what salary was needed to feel financially secure, the average response in our survey was $73,785 – more than 15% higher than the actual average annual wage of $61,659.

Younger generations were more likely to say they needed an even higher salary to feel financially secure.

Does Feeling ‘Broke’ Correlate With the U.S. Poverty Line?

While 48.6% of Americans in our survey say they feel “broke,” only 11.5% of all Americans actually fall below the poverty line, according to the Center for American Progress. Poverty rates are higher for women (12.5%) than men (10.5%) and also vary by race, with Native Americans, Latinx and Black Americans all experiencing higher rates of poverty than white Americans.

Poverty Rate by State

When broken down by state, the poverty rate is highest in Mississippi (19.2%) and Louisiana (18.6%). New Hampshire and Utah have the lowest rates of poverty, at 7.2% and 8.2%, respectively.

Experts Explain Why People Go Broke

Whether you feel broke from living paycheck-to-paycheck, or are actually living below the poverty line, there are many reasons that people report feelings of being “broke” or do not have enough money to feel financially secure, according to six experts we spoke with.

Some factors are outside of an individual’s control, while others can be solved with responsible money-management practices.

“It could be a medical catastrophe that involves large medical bills. It could be poor decision-making with credit, credit card abuse being one of the most challenging. It could be due to a lost job or a poor economy,” said Dr. Jacob Tenney, assistant professor and director of financial planning for the University of Charleston’s School of Business. “Recently, it may be due to high inflation causing prices to rise significantly. It could be retail therapy where individuals use shopping as a way to relieve stress or to deal with depression. It could be that individuals don’t know how to manage money.”

Not understanding your income and expenses can lead to overspending and undersaving, said John Lopez, senior professor of finance at the University of Houston’s C.T. Bauer College of Business.

“Knowing the amount of income and where that income is going is critical to managing your money,” Lopez said. When you don’t have adequate emergency savings, he added, it makes it difficult to manage unexpected financial challenges.

While there is not much that can be done to avoid a medical emergency with high bills or inflation, some of these situations can be avoided with the right strategies.

James Burroughs, Rolls-Royce Commonwealth Eminent professor of commerce and director of the global commerce program at the University of Virginia, said it is best to focus on the situations you can control.

“This means setting and sticking to a budget. This will help ensure that obligations are met, and even allow some discretionary spending within reason,” Burroughs said. “Also, putting the right risk mitigation strategies in place – insurance or potentially incorporating if a small business, etc. – can be very important.”

Prevent Financial Insecurity with Smart Saving and Spending Practices

Avoiding going broke means making smart money decisions that can help you avoid financial emergencies in your control and better prepare for those out of your control, our experts said.

First and foremost, balancing your budget and having a good spending plan can help ensure you aren’t living beyond your means, they said.

“The bottom line is that at all ages, it is financially prudent to take account of where you are spending your money and then evaluate whether or not that is what you want to be doing,” said Dr. Ken Cyree, professor of finance at the University of Mississippi School of Business Administration. “For example, if you feel financially constrained and you are eating out five times per week, that is too many times, or at a minimum means that you would need to reduce spending somewhere else to afford this.”

Beyond this basic tip, the best way to shore up financial security might vary by age, experts said.

Kathleen Vohs, Land O’Lakes professor in marketing at the University of Minnesota, said younger people should focus on building savings while older Americans should focus on spending.

“For people in their 30s, the goal really at that point is to build up as much in savings and in value of compounding interest and compounding assets so that the more that you have when you’re younger or earlier on in time, [you] get gains on top of that initial amount,” Vohs said. For those in their 60s, however, she recommends taking a close look at how you use the money you’ve already saved to ensure you balance the lifestyle you want to last throughout retirement.

Younger people also might have to face higher costs, as they take on their first mortgage, car payment and other expenses, often with a lower salary, said Ronald Hill, dean’s professor of marketing and public policy at American University.

“Consumers often struggle in their 30s as a function of expanding living costs associated with marriage, children, larger living quarters, more mouths to feed, etc,” Hill said. “This is a normal trajectory but requires caution before incurring expenses that are not mandatory so as not to end up with mountains of credit debt.”

Those in their 30s will need to balance paying for these expenses with saving for the future.

Meir Statman, Glenn Klimeek professor of finance at Santa Clara University, warns that while young investors can take risks in their investment portfolios, older Americans should be careful to maintain any money they’ve earned with safer investments.

“I recall a story about a woman in her 60s who placed her entire retirement savings in a store that subsequently went bankrupt,” Statman said. “The time to take major risks in portfolios and work is when you’re young.”

Final thoughts

Clearly, financial insecurity is high for many Americans these days. And while even those above the U.S. poverty line report feeling “broke,” many are living paycheck-to-paycheck and earning less than they believe they need to feel financially secure.

Some of the causes of this disconnect are out of your personal control – including low average wages and an increased number of emergencies that can drain your savings – but smart money moves including a strong budget, avoiding credit card debt and smart investment strategies can help with financial situations in your control.

Methodology

Our team used data from our 2024 Generational Banking Trends survey collected from Feb. 13-15, 2024. The MarketWatch Guides Team surveyed 2,000 Americans using Pollfish, a third-party market research and survey platform.

Our other research data sources include:

• American Progress, Data on Poverty in the United States, 2022
• Bureau of Economic Analysis, Personal Savings Rate
• The New York Federal Reserve Bank Household Debt and Credit Report, Q3 2023
• U.S. Bureau of Labor Statistics, Current Employment Statistics – CES (National)

Our Experts

Dr. Jacob Tenney, assistant professor and the director of financial planning in the School of Business at the University of Charleston

Jacob Tenney, Ph.D., is a certified financial planner (CFP) and assistant professor and the director of financial planning in the School of Business and the University of Charleston, where he has taught since 2018. Jacob teaches courses in financial planning, financial literacy, and business finance. He is passionate about spreading financial literacy and helping the rising generation reach financial and life goals.

James Burroughs, Rolls-Royce Commonwealth Eminent Professor of Commerce

Director, M.S. in Global Commerce Program at the University of Virginia

Professor Burroughs works and teaches in the area of consumer behavior, focusing specifically on such topics as materialism, consumer culture and consumer creativity. Burroughs has recently been active in transformative consumer research, which is consumer research that examines how consumption activities impact personal and societal well-being.

John Lopez, senior professor of finance at the University of Houston’s C.T. Bauer College of Business

John C. Lopez began teaching at the Bauer College of Business after taking an early retirement from Corporate America. Lopez created, manages and teaches the personal financial planning track at the Bauer College of Business.

Dr. Ken Cyree, professor of finance at the University of Mississippi School of Business Administration

Dr. Ken B. Cyree is the dean, the Frank R. Day/Mississippi Bankers Association chair of banking, and professor of finance at the University of Mississippi School of Business Administration. Dr. Cyree received his doctorate and MBA from the University of Tennessee. He is the director of the Mississippi School of Banking and was a former faculty member at the graduate school of banking at LSU for over 20 years. Cyree worked in industry as a credit manager in the textile industry for many years before entering academia.

Dr. Cyree’s research interests are in banking, financial markets, interest rates and financial regulation. He has papers published in the Journal of Business, Journal of Banking and Finance, Financial Management, Journal of Financial Research, the Journal of Financial Services Research, the Journal of Financial Markets, and Financial Review, and Public Choice, along with many other academic journals.

Meir Statman, Glenn Klimeek professor of finance at Santa Clara University

Meir Statman is the Glenn Klimek professor of finance at Santa Clara University. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets. His most recent book is “Behavioral Finance: The Second Generation,” published by the CFA Institute Research Foundation. Professor Statman is the author of “A Wealth of Well-Being: A Holistic Approach to Behavioral Finance.”

Meir’s research has been published in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, the Financial Analysts Journal, the Journal of Portfolio Management, and many other journals. The research has been supported by the National Science Foundation, the CFA Institute Research Foundation, and the Investment Management Consultants Association (IMCA).

Kathleen Vohs, Land O’Lakes marketing professor at the University of Minnesota

Kathleen Vohs is a member of the Distinguished McKnight University Professors program and Land O’Lakes marketing chair at the University of Minnesota. Vohs’ research specialties include self-control, the hidden costs of decision-making, the psychology of money, the difference between a meaningful and happy life, and heterosexual sexual negotiations. She has written more than 250 scholarly publications and has been the editor of nine books on topics including social psychology and self-regulation.

Ronald Hill, the dean’s professor of marketing and public policy at American University

Ronald Paul Hill has a Ph.D. in business administration from the University of Maryland and is the dean’s professor of marketing and public policy at the American University, Kogod School of Business. Hill has authored over 200 journal articles, books, chapters and conference papers on topics that include impoverished consumer behavior, marketing ethics, corporate social responsibility, human development and public policy. His research has been included in the Journal of Marketing Research, Journal of Consumer Research, Journal of Marketing, Business and Society, International Journal of Research in Marketing, Human Rights Quarterly, Journal of the Academy of Marketing Science, and Harvard Business Review. He currently serves as the vice president of publications for the American Marketing Association, and he is editor-in-chief of the Responsible Research in Business and Management Honor Roll. He was the editor of the Journal of Public Policy & Marketing from 2006 to 2012 and he served as editor of the Journal of Consumer Affairs 2018 to 2022.