You’ve probably heard reports about money statistics in America. Even if you don’t know the numbers down to the cent, you know this—it doesn’t look good. And while we’re all a little frustrated with the way our government spends money, we might need to take a step back and look at some of our personal spending habits. After all, the little things matter; and if we want to change our country, we have to start with our own households.
So, are you ready to find out how you stack up against the average? Buckle up! Here are a few of the most shocking money stats in America today—and a few tips to avoid them.
Instead of looking at the average consumer debt in one large sum, let’s break this down into categories. Americans as a whole owe more than $1.2 trillion in educational debt, with the average student loan hovering just under $29,000. Meanwhile, the average car loan has hit an all-time high at more than $30,000! That kicks the average monthly payment past the $500 mark. With the average American facing monster debts like these, it’s no wonder people rely on their credit cards—which, by the way, have an average balance of more than $15,000. And there are more than 1.4 billion open credit cards in the United States alone. Oy vey!
Your head is probably spinning from all those numbers, but there’s a pretty simple solution to kicking that debt to the curb. The first step is simple: Create a zero-based budget. We can’t be too surprised at these debt figures when we realize that 57% of households don’t actually have a budget. If you don’t decide where your money is going, it’s going to decide for you!
Related: How to Make a Zero-Based Budget
EMERGENCY FUND SAVINGS
Fifty percent of Americans have less than one month of their income saved for a rainy day (emergencies). Sure, that might not sound too positive. But guess what? We’re positive it’s going to rain! If you don’t have cash on hand when the heater goes out in the dead of winter or you lose your job, you’re going to fall back on credit cards to keep you afloat. And with nearly half of American households not saving any of their money, that’s exactly what is happening. Yikes!
First things first: Save $1,000 as your beginner emergency fund. Second: Pay off your consumer debt. It’s stealing your income and preventing you from saving up a buffer to keep between you and the curve balls that life can—and will—throw your way. Once that’s done, start socking away money to build up that emergency fund until you have 3–6 months of expenses (not income, but expenses) in a savings account. Yes, you read that right. Keep it in a savings account; don’t invest it. You want to be able to easily access this money in the event of an emergency. Otherwise you’re right back to the ole credit card.
Research shows that 58% of Americans are saving for retirement. That means 42% of people in the United States aren’t. Even among those 58% who are, only one in 10 save 15% or more of their income for retirement. Now, that’s a lot of numbers, but it boils down to this: Few people are saving enough money today to live a comfortable life tomorrow.
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The best way to prepare for your golden years is to actively put away 15% of your household income for retirement. Start with your 401(k). If your employer matches a part of your contribution, begin there. Once you’ve invested enough to get the match, go to a Roth IRA and max that out. If you still have money left to contribute, circle back to your 401(k) and finish up your 15% investment there. And in the meantime, get with a SmartVestor Pro to help you figure out where you stand with your retirement savings and how to make the most of the eighth wonder of the world: compound interest.
It’s tough to calculate the average mortgage debt in America because there are so many factors. But the average American owes over $171,000 on their home, and the average monthly mortgage payment is more than $1,000. If those numbers don’t make your eyes go wide, nothing will. It’s not too uncommon to owe money on the house—but does that mean you should settle in and carry a mortgage for the rest of your life?
Get this: More than 20 million Americans actually own their homes. That means they don’t owe a single dime on their house! That’s right—they don’t have to send a big chunk of their paycheck to the bank to keep a roof over their heads. Can you imagine how it would feel to have an extra $1,000 or more each month? Once you’re out of consumer debt, you can get aggressive about paying off the house. Imagine double and triple payments. Think about it. Multiply your monthly mortgage payment by 12 and ask yourself this question: What would my life look like if I could give myself this big of a raise?
Let’s face it—debt is normal. But who wants to be normal? You can start combatting these scary statistics with a single step: getting out of debt. Sure, it may sound intimidating. You may think you can never climb out of the hole you’re in. But that simply isn’t true. You can make one choice today that will turn your life around and take you from average to incredible.
Where do you start? Check out Financial Peace University. No really. It'll make all the difference.