This past week I read the 2015 Economic Well Being of U.S. Households report and it has revealed astonishing statistics about the state of personal finances in this country. While I’m aware and sensitive to the fact that economic conditions affects each household differently, it is still important to note that financial literacy and education is crucial for everyone. Will it change your current economic hardships or personal circumstances? Perhaps not immediately, but it will definitely equip you to make the right decisions moving forward!
It’s a given that not everyone will make the same amount of money, have the same financial stability, have the same retirement account or be able to save as fast as others, but if you become aware, proactive and take control of your personal finances, regardless of the tax bracket you are in, you are empowering yourself and positioning yourself to improve financially.
Here are some facts that have seriously impacted me and hopefully they will be insightful and make you reflect on your own circumstances:
- In this country, 46% spend above their means!
- 31% spend equal to their income and 15% spend more than they actually earn! This is why it’s so important to live below your means and to create a budget! Here is spending by family income:
- Unfortunately, 46% of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.
- 53% do not have an emergency fund to cover for 3 months of expenses.
As we all should know, savings for retirement is a huge part of investing in your future and being part of your financial principles. However,
- 31% of non-retired respondents report that they have no retirement savings or pension at all, including 27% of non-retired respondents age 60 or older.
Since, millions of households do no have savings…
- 38% would use a credit card for an emergency and pay over time because they don’t have the cash
- 57% carry balances on their credit cards for one month or longer! So not only is cash extremely tight, you are having to pay extremely high interest rates!
These are top reasons for economic hardships and concerns that can cripple your financial life if you don’t have an emergency fund:
- losing your job
- reduction in work hours or pay
- your partner/spouse loses their job
- eviction/foreclosure notice
- death in the family
- business experiences financial difficulty
I’m sure by now you have reflected on these statistics and compared them to your life. No matter what stage you are in with your personal finances, I’m sure there is an area of focus / improvement. Check out the following images, as you may identify with one of them. It demonstrates the most important aspects of personal finances by family income ranges:
Truth be told, all of these statistics and findings from the Federal Reserve’s report gives me a deeper purpose for creating and growing this blog. I am working on a robust strategy for addressing the gap in financial literacy.
There is urgency to improve financial fluency with adults in this country, but more importantly we need to focus on our youth and the future generations!