NEW YORK — In a world where money talks, the art of whispering back is figuring out how to finally reach financial independence. However, four in 10 Americans don’t believe they’ll achieve financial independence within the next five years, according to a new survey.
Additionally, 42 percent of respondents have experienced significant financial setbacks in the past three years. The survey of 2,000 Americans found that an increased cost of living expenses (68%) was the primary culprit. Other setbacks were found to be unexpected medical expenses (59%), pay cuts (53%), and job loss (49%), with many also saddled with high levels of personal debt (41%).
It’s not all doom and gloom however, as an impressive nine out of 10 who experienced financial setbacks also stated that they have started their journey to recovery. The survey, conducted by OnePoll on behalf of Prosper Marketplace, found that the most effective path to financial recovery was simply sticking to a budget (72%). That was followed in popularity by securing new employment or exploring supplementary sources of income (56%).
Another 56 percent of participants said they implemented debt management strategies and repayment plans to regain their financial stability. Over half of the respondents (51%) have set their sights on becoming debt-free as part of their long-term plans.
In terms of lowering debt, many (69%) suggest transferring credit card balances to lower-interest cards. Six in 10 would also consider transferring credit card balances to a new card offering a low or 0 percent APR on balance transfers for a limited time.
“Refinancing debt to lower interest alternatives is a smart move,” says CEO at Prosper, a consumer fintech company, David Kimball, in a statement. “We see people consolidate debt using unsecured personal loans, home equity lines of credit, or home equity loans. Homeowners can access larger loans at better rates secured by their home equity, without having to sacrifice their low mortgage rate with a cash out re-fi.”
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The top three strategies to improve their own financial control were found to be prioritizing saving and establishing an emergency fund (54%), setting clear financial goals and formulating plans to achieve them (53%), and diligently creating and adhering to a budget (43%).
For long-term plans, four out of 10 respondents expressed a desire to buy a house or property, establish an emergency fund, and save for retirement.
Additionally, 49 percent of respondents have chosen to invest in stocks, bonds, or mutual funds, while 42 percent have explored alternative investment options like real estate investment trusts (REITs) and peer-to-peer lending.
And if people had additional funds, they said they’d invest in assets paying regular dividends (51%), alternative investments such as real estate and peer-to-peer lending (49%), and rental property (35%).
“With recent market volatility, there’s been increased interest in alternative investments, like peer-to-peer lending, that can provide a passive or secondary income stream,” adds Kimball.
Additionally, 38 percent of those surveyed have the ambitious goal of venturing into entrepreneurship. A notable 50 percent of those polled have already done so, by creating and selling digital products.
Survey methodology:
This random double-opt-in survey of 2,000 Americans was commissioned by Prosper between June 13 and June 16, 2023. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).
