25 Shocking Statistics About Personal Finance in the US

I was recently able to take part in a personal financial seminar where the speaker informed us of some shocking statistics about personal finance in the United States. I’m not sure where he got all these numbers on the state of personal finance but they aren’t unreasonable and they point to the fact that we as a nation have a long way to go before any “recovery” can actually take place in our own finances. Certain businesses or industries may be seeing a little bit of a recovery, but for the most part, individuals are not taking part in it.

Personally, I was shocked that things were STILL this bad but several searches on the Internet confirmed that his statistics were relatively accurate. In some cases, the numbers were even worse than his.

Shocking Personal Finance Statistics

  • 30% have less than $1,000 in all bank accounts at any given time
  • 56% have a net worth less than $25,000
  • 95% of Baby Boomers don’t have enough for retirement
  • Over 50% of Americans didn’t save one red cent last year
  • Americans have over $950 BILLION in credit card debt
  • That averages out to over $8,500 per household
  • One third of all mortgage applications were rejected last year
  • Over 50% of those don’t realize that their credit score was the main reason
  • Students graduating from college average $24,000 in student loan debt
  • Student loan debt totals over one TRILLION dollars
  • 32 million people face possible bankruptcy this year
  • That’s more than the number of people that will graduate college … or get divorced
  • 40% of Americans will spend 110% of their income this year
  • 65% of Americans literally live paycheck to paycheck and have NO household budget
  • 20% of them make over $100,000 annually
  • 10,000 Baby Boomers turned 65 … today
  • That will happen each and every day for the next 19 years
  • Fully one third of Americans admit to having not saved anything at all for retirement
  • 60% of them have no idea how much they’ll need
  • 35% of Baby Boomers will depend on Social Security alone
  • How much will Social Security give you? About $26,000 per year before taxes …
  • The poverty line for a family of 4 is $22,050 (2012 numbers)
  • Two thirds will retire with less than $25,000
  • 35% will retire with less than $10,000
  • Just 2% of Americans have an adequate pension plan in place

What should you and I do?

Recognize yourself in any of those statistics? If you do, what can you do to reverse the trend?

First, we have to take responsibility. Realize that the reason we’re in the shape we’re in is because of choices we’ve made in the past. Only when we take responsibility for our actions can we begin to recognize destructive behaviors, stop them, and begin again in a new direction.

Second, we have to decide to become financial independent. We cannot depend on government or the generosity of others when we’re fully capable of setting our own course and working to get there. You may have to take on a second job to make extra money or sell some items to generate cash to pay off debt.

Third, we have to establish and live by a budget (try the Mint.com budget – it’s FREE). We have to recognize the difference between needs and wants and we have to stop indulging ourselves in every luxury that comes down the pike because “a luxury once sampled becomes a necessity.”

Fourth, we have to pay off our beloved credit cards each and every month. Having one isn’t bad … it isn’t wrong … it isn’t Satan in the form of plastic. But it could be your downfall if you let it get out of control. Running a balance = out of control.

Fifth, we have to save 15% of each and every paycheck. Put those funds into a savings account and when the balance reaches $5,000, move half of it into an Roth IRA investment account at Scottrade, Vangard, or some other online brokerage. Invest those funds into broad based index funds and stay away from individual stocks unless you’re SURE you know what you’re doing. IF YOU DON’T work with an investment advisor.

Monitor and track your progress, both with getting your expenses and debt under control and with how well your cash reserves and investments are growing. Make adjustments and revise your strategy along the way. TAKE control, don’t just let things happen.

If your employer offers a 401k, particularly one with matching funds, dive in and take advantage of it.

In a nutshell

  • Take charge
  • Pay off debt
  • Control your expenses
  • Budget
  • Save
  • Invest
  • Protect
  • Grow
  • And succeed

Make sure YOU are not just another statistic.