Survey Reveals Over Half of Americans Earn Passive Income

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Sep 10, 2024

Survey Reveals Over Half of Americans Earn Passive Income

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The 2024 Financial Wellness Survey, conducted by FNBO (First National Bank of Omaha), examined how Americans are handling their finances amid inflationary pressures and a volatile economic environment. The survey found that 56 percent of Americans are able to pay off their credit card balances in full each month, and 55 percent have an emergency fund that covers at least three months of expenses.

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However, 45 percent of respondents reported living paycheck to paycheck. In terms of retirement savings, more than half of Americans surveyed have at least $10,000 set aside.

Regina DeMars, financial insights specialist at FNBO, emphasized the importance of building strong financial habits during uncertain times. “With both inflation and broader economic uncertainty continuing to linger, cultivating smart and sound personal finance habits is as essential as ever.”

She continued, “While every Americans’ financial journey and circumstances may be unique, building a solid foundation in saving and budgeting, along with bolstering strong financial literacy skills, will always go a long way in paving the path to long-term financial success.”

The survey also highlighted varying views on the U.S. economy, with 38 percent of respondents holding a negative outlook for the remainder of the year. While 33 percent expressed a neutral outlook, 29 percent reported a positive economic outlook.

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Passive income and ongoing debt challenges

In addition to savings and economic views, the survey delved into multiple aspects of personal finance. One notable finding was that 53 percent of Americans have at least one source of passive income, which has helped to diversify revenue streams during uncertain times.

This trends suggests that individuals are seeking ways to bolster their financial security beyond traditional income sources.

The survey also revealed mixed responses regarding Americans’ ability to manage debt. While more than half are able to pay off their credit card bills each month, a significant portion struggles to build sufficient emergency funds or avoid living paycheck to paycheck.

The survey further noted that 55 percent of respondents have emergency savings worth at least three months’ expenses, which is often considered a critical safety net for financial stability.

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Creating a budget

Creating a budget is a fundamental step toward managing personal finances effectively. To begin, start by listing all sources of income. This includes wages, side jobs, and any other earnings. Having a clear picture of how much money is coming in each month provides a solid foundation for a budget.

Next, track monthly expenses. This includes fixed costs like rent, utilities, and groceries, as well as variable costs like entertainment or dining out. Review past bank statements to accurately identify spending habits.

Once income and expenses are outline, it’s time to set financial boundaries. Prioritize necessary expenses and trimming nonessential spending. Unused subscriptions or impulse purchases can often be reduced or eliminated to free up money for savings or debt repayment.

At the end of each month, a budget review can help identify areas for improvement.

Building an emergency fund

Building an emergency fund is one of the most crucial steps in achieving financial stability. To start, allocate a portion of each paycheck toward a dedicated emergency savings account. By consistently saving, even small amounts, you can gradually build a solid financial cushion.

Prioritize this fund over discretionary spending. This means cutting back on nonessential purchases, such as unused subscriptions or entertainment, and redirecting those funds toward savings.

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Eliminating debt

The first step in eliminating debt is to understand how much is owed. Gather all statements and make a list of every debt, including credit cards, student loans, and other obligations. Knowing the total debt amount and the interest rates attached to each balance helps prioritize which debts to tackle first.

One common strategy is the debt snowball method, where you focus on paying off the smallest debt first, while making minimum payments on the rest. This method provides quick wins and boosts motivation as smaller balances are cleared.

Another approach is the debt avalanche method, where you focus on debts with the highest interest rates. By reducing this debt first, more money can be saved in the long run.

Pay more than the minimum on any debt whenever possible. Even small payments can help reduce the principal balance and lower the interest paid over time.

Creating a budget specifically geared toward debt elimination can also be helpful. By cutting back on nonessential expenses, more money can be funneled toward paying down balances faster.

And, don’t take on new debt while working to eliminate existing obligations. Limit the use of credit cards and focus on paying down your current debt to get to long-term financial stability faster.

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The bottom line

Building a strong financial foundation requires careful planning, budgeting, and cutting unnecessary expenses. By creating budgets, building emergency funds, eliminating debt and reducing discretionary spending, you can strengthen your financial health and work toward long-term stability.

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Lissa Poirot is an award-winning journalist and editor with a focus on finance, travel and health. Her work has appeared online and in print, and she has often been cited as a source on both. She currently resides in Pennsylvania.

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