Cincinnati - Gone are the days of defining the American Dream as a two-story home surrounded by a white picket fence. Today, more Americans value peace of mind than homeownership.
In fact, in a recent YouGov study commissioned by Fifth Third Bank (NASDAQ: FITB), only 15 percent of Americans identified buying a home as one of their top three financial goals. Instead, the survey found top financial priorities include paying off debt (43%), saving for an emergency (41%) and having a retirement plan (28%). Even among non-homeowners, establishing peace of mind through saving for an emergency (41%) and paying off debt (38%) is a more significant financial target than homeownership (21%).
But despite redefining financial security as the New American Dream, Americans aren’t making progress. Approximately 25 percent report they aren’t contributing to their savings. And among low-income Americans1, rates are even worse: 39 percent aren’t saving at all.
What’s Standing in the Way
According to the U.S. Census Bureau, the median household income rose in 2016 to $56,516, while the poverty rate decreased by 3.5 million people to 13.5 percent, the lowest it has been since 1999. But this economic upswing didn’t translate to peace of mind for most Americans; 73 percent cited at least one roadblock to financial security. The three most common include:
- Not making enough money to be able to save for emergencies (39%)
- Not making enough money to be able to save for themselves (38%)
- Having too much debt (24%)
“The results of this survey give new insight into the opportunities and obstacles Americans face when it comes to their finances,” said Brian Lamb, executive vice president and chief corporate social responsibility and reputation officer for Fifth Third Bank, who analyzed the results of the survey. “With nearly three in four Americans hindered from financial security, it is important we commit ourselves to improving the financial quality of life for consumers in the communities we serve.”
In addition to fear of debt – which Lamb attributes to vestiges of the 2008 financial crisis – the YouGov survey indicated financial knowledge may stand in the way of the American Dream… or may at least have a hand in redefining it. Approximately 44 percent of all Americans did not take any kind of financial education courses in high school or college, even though nearly three in five (54%) of those who did found the information helpful in managing their finances today.
“These survey results underscore something Fifth Third has known for a while: consumers are struggling to reach their financial objectives,” said Byna Elliott, senior vice president and director of Community & Economic Development. “That’s something we really need to change. We can do better.”
What Can Be Done – Today
In November 2016, Fifth Third Bank committed $30 billion over four years to lending, investments and community development in low- and moderate-income communities within the Bank’s 10-state geographic footprint – including a significant investment in financial education for individuals at all ages and stages of life. The Bank’s L.I.F.E. (Lives Improved Through Financial Empowerment®) platform offers financial education programs for everyone from fifth graders to adults, at no cost.
“There are three things an individual can do today to start to achieve the New American Dream of financial security: plan ahead, seek out savings and automate the process,” said Lamb.
- Plan ahead: Owning a home doesn’t have to be your dream, but decide what it is, and create a budget to support your goals. If creating a budget sounds like a daunting task, try using a financial calculator.
- Seek out savings: Consider expenses you could adjust to save some extra money. Can you refinance your mortgage? Ask for a premium review from your insurance provider? Dine out less frequently?
- Automate the process: Automatically deduct savings from your income, and you likely won’t even know it’s gone.
For more information about Fifth Third Bank’s financial empowerment and education modules, visit https://www.53.com/financial-empowerment/.
1. For the purposes of this survey, low-income is defined as Americans whose total household income is less than $40,000 per year and $10,000 in assets.
About Fifth Third
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. As of December 31, 2016, the Company had $142 billion in assets and operates 1,191 full-service Banking Centers, and 2,495 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending and Wealth & Asset Management. Fifth Third also has a 17.9% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2016, had $315 billion in assets under care, of which it managed $31 billion for individuals, corporations and not-for-profit organizations through its Trust and Brokerage businesses. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the NASDAQ® Global Select Market under the symbol “FITB.”
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,380 adults. Fieldwork was undertaken between 7th - 10th March 2017. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).