On a sunny May afternoon in 2011, Ebony Horton accepted her MBA from Webster University. As she stepped down from the stage still clutching her diploma, she pictured herself at the start of a successful career in business.
Two years later, Horton was still plugging away in an entry-level administrative role, making a $38,000 salary and struggling to get by. To make matters worse, Horton had deferred her student loans. In the years since her graduation, interest had caused her student loan debt to balloon from $132,000 to $220,000.
Horton realized she needed to make a change to deal with this debt, so in 2013, she began overhauling her life. She slashed her spending by moving to a less expensive city and diverted every spare cent into her loan repayments. After four years of hard work and diligent saving, Horton made her final loan payment, wiping out the last of her $220,561 debt. Horton’s story is an inspiring one, showing what you can achieve with enough determination and discipline. But there’s more to it than that.
There’s no disputing that Horton worked exceptionally hard to wipe out her debt. But she also had advantages that aren’t available to everyone. She moved in with her grandparents to save on rent and was given the deed to a condo as a wedding gift, which she rented out for passive income. While everyone can emulate Horton’s hard-working attitude, few have access to rent-free accommodations — and even fewer are gifted rental properties.
That makes achievements like Horton’s tricky to talk about. They’re great stories and are hugely inspiring. But they’re also outliers. And that’s important, because outlier stories make us feel better about the fact that not everyone has access to the freedoms required to achieve their own American Dream.
In October of this year, we surveyed¹ 1,083 Americans what the American Dream meant to them, and whether they felt they’d achieved it. Of our respondents, 83% said that “freedom of choice in how to live” was essential to the American Dream. Yet only 24% said they were currently living the dream; another 24% said it was within reach. That leaves over half of us feeling unsure about whether the American Dream will ever become a reality for us.
To figure out why this is, we don’t have to look far. From this same survey, 65% told us that they spend more money than they make. Eighty percent don’t have at least six months of emergency savings, and 65% can’t plan ahead for their finances. Other studies show that Americans work some of the longest hours in the world, yet up to 78% of them are living paycheck to paycheck. Those who try to get ahead are up against college tuition that’s more than doubled, not to mention the prospect of paying off that debt far into their golden years.
Without positive cash flow, plans for the future, savings to fund those plans, and access to credit to smooth out the bumps along the way, it’s tough to argue that people truly have “freedom to be and do what you want to.” The Financial Health Network has found that without financial health in those specific areas, people are much less free to “pursue opportunities over time.” Since freedom is the most crucial element of the American Dream, it’s really no wonder that around half of people didn’t feel the American Dream is within their reach: Their financial circumstances simply don’t allow them true freedom.
This is, in part, what accounts for Horton’s admirable success story. Because of her circumstances, she had access to positive inexpensive rent and passive property income. This kind of positive cash flow funds all types of things: growing savings, the ability to make future plans, and insurance against bad credit. In short, it provides access to freedom, which means an ability to live the American Dream. So how can we get more people there?
If the American Dream is about freedom, then the most important thing Americans need is financial stability that protects them against losing control. This is backed up by data from Pew Charitable Trusts, which shows that the vast majority of Americans — 92%, to be exact — would rather have financial stability over income mobility. But instead, Americans are struggling to make ends meet, losing billions of dollars to cash-flow emergency “solutions” like overdraft charges, soaring bank fees, and payday loans.
As a result, Americans aren’t putting any money away — and that’s not getting anyone closer to their American Dream. In the 1970s, people tended to save 15% of their monthly income. By the ’90s, that number had fallen to 10%. Now, we save just 7%. And many of those who do save can’t hold onto the money for long. Research from U.S. Financial Diaries’ Savings Horizons showed that saving pots are wiped out over and over again as people dip in to pay for unforeseen expenses.
Americans need ways to make more with what they have. People need a way to build savings that can absorb cash-flow emergencies without resorting to expensive, predatory products, and give them a foundation to start planning for their futures. When people can spend less time struggling to save, or cobbling together plans for the short-term, they’ll have more freedom to achieve their American Dream.
Want to learn more about how a lack of financial wellness is holding people back from their dreams? Download our research paper, Measuring the American Dream.
 This survey was conducted by Survata, an independent research firm in San Francisco. Survata interviewed 1,083 online respondents between October 1, 2019 and October 2, 2019. Respondents were reached across the Survata publisher network, where they take a survey to unlock premium content, like articles and ebooks. Respondents received no cash compensation for their participation. More information on Survata’s methodology can be found at survata.com/methodology.
Get updates around new research and findings in your email.