Are you financially secure? CNBC poll reveals what Americans mean

If you spend enough time on social media, you will find them: the brothers of financial security. They will tell you how to become more financially secure with their 14-point plans, but they never tell you what financial security means.

That’s probably, in part, because financial security can mean many different things to different people, depending on their income and financial situation. But unlike trying to define “financial independence” or “wealth,” “financial security” is a term that many people have an idea of ​​what it means to them.

Recently, CNBC conducted a poll to find out what financial security meant to its viewers, and the results may surprise you.

1. Financial security means having no outstanding debts

Of those surveyed, 59% agreed that not having outstanding debts was the most important element of financial security. Average consumer debt, according to the Federal Reserve Bank of St. Louis, was 5.78% of personal disposable income as of Q4 2023.

Consumer debt does not include mortgage payments, just things like credit cards and installment loans. When mortgages are accounted for, household debt service payments as a percentage of disposable income reached 9.79% in Q4 2023.

But this is an average, so households with zero outstanding debt will lower the number, while households with extremely high debt, which may include education debt or new mortgages, will pull it up, both of which will cause a distortion. .

2. Financial security means high levels of savings

The second most important element of financial security, according to CNBC, was a high level of savings — 47% of respondents said this was vital. Considering that the personal savings rate as a percentage of disposable income in May 2024 was only 3.9%, it seems that this may be one of the most difficult items to achieve on the road to financial security.

Of course, high savings rates are much easier to achieve if you’re debt-free, so the first two on the list go hand-in-hand.

3. Financial security means owning your own home

Not surprisingly, CNBC respondents ranked home ownership in the top three elements of financial security. In fact, 45% felt that owning your own home was vital to being financially secure. As a former realtor, I can’t disagree with this idea. Owning a home means that a certain amount of your housing budget is fixed, making it easier to plan for the future.

The current rate of home ownership in the United States, despite the press about how nobody can buy a house these days and how nothing is affordable, was at a respectable 65.6% as of Q1 2024. The highest it has ever been since records began in 1965 was 69.2% in both Q2 2004 and Q4 2004, and the lowest was 62.9% at several points along the way.

The story continues

4. Financial security means having a well-paid job

I think it’s interesting that a well-paying job in a safe field is listed fourth for CNBC survey respondents, as that’s what it takes to easily secure the top three on the list. But 38% of respondents also agree that earning a good income is vital to financial security. I think many Americans would agree with that, even if they weren’t polled.

This is much harder to achieve, it seems, based on economic data. The median personal income in the US in 2022 was $40,480, which is about $3,373 per month. But the median home sale price as of the first quarter of 2024 was $420,800. Even if you had 10% down on a 30-year fixed-rate mortgage with a rate of 7.188%, you’d be paying $2,568 a month for that home. This math just doesn’t do math.

If you factor in the median household income, which was $74,580 a year in 2022, you’re closer to achieving that home, savings, free living with an income of $6,215 a month — but that’s for everyone in the family that work. And more people means more expenses and the need for things like childcare. It gets complicated and the benefits of that extra income can be hidden.

Financial security is what you make it

Being financially secure can mean many different things to different people, but I would definitely agree that the top three on CNBC’s list are must-haves. But what do you do if you work in a field where high incomes just don’t happen (think social work, teaching, or law enforcement)?

Well, you do the best you can. There are cheaper than average homes almost everywhere, although they are usually very competitive to buy. There are ways to get out of debt, although it will take much longer. But once you do, you’ll be able to put savings into an emergency fund that will support your lifestyle if something goes wrong.

So while it may be harder to achieve some financial security without a six-figure income, it’s all relative, really. The real question is, do you feel financially secure? That’s all that really matters at the end of the day.

These polls are interesting, but they are only a starting point and never a reason to beat yourself up for not keeping up with someone whose life is completely and utterly different from yours. Success is what you make of it.

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Are you financially secure? CNBC poll reveals what Americans think This was originally published by The Motley Fool