10 Hard Truths About American Finances

Personal finance, a world where navigating debt, saving for a rainy day, and planning for your future retirement can feel like a full time job. Your money competes with your future, and what you want now, and the tug of war can feel exhausting. In the US, a lot of people are unfortunately losing the battle, with trillions in debt, underfunded emergency funds, and scant retirement savings.

Let’s check out 10 facts about the financial lives of Americans.

1. High Levels of Consumer Debt: As of early 2023, total U.S. consumer debt exceeded $16 trillion, with credit card debt alone surpassing $1 trillion, indicating a significant reliance on borrowing.

2. Insufficient Emergency Savings: A 2022 survey found that only 25% of Americans had enough emergency savings to cover six months of expenses, highlighting a vulnerability to financial emergencies.

3. Retirement Savings Shortfall: A report from 2022 indicated that the average retirement savings of Americans was around $65,000, far below what is considered necessary for a comfortable retirement.

4. Rising Healthcare Costs: Healthcare costs have been steadily increasing, with the average annual premium for family health coverage reaching $22,221 in 2021, posing a significant burden for many households.

5. Lack of Financial Literacy: Surveys show that less than one-third of Americans are considered financially literate, underscoring a gap in understanding and managing personal finances effectively.

6. Dependency on Credit Cards: The average credit card balance for Americans who carry a balance was $6,569 in 2021, reflecting a dependence on credit for personal expenditures.

7. Income Inequality: The Gini coefficient, a measure of income inequality, was 0.485 in 2019, suggesting significant income disparity among Americans, with the top 20% of earners receiving over 50% of all income.

8. Underemployment and Job Insecurity: As of late 2022, the underemployment rate in the U.S. was around 7%, indicating that a notable portion of the workforce is not fully utilizing their skills or working fewer hours than they would prefer.

9. Housing Affordability Crisis: In 2021, the median home price in the U.S. was over $346,000, up more than 16% from the previous year, making homeownership increasingly out of reach for many Americans.

10. Student Loan Debt Burden: Student loan debt in the U.S. reached nearly $1.7 trillion in 2022, with the average borrower owing around $37,000, affecting financial decisions and well-being for many individuals.

While the statistics above are concerning for many people, there are steps you can take today in order to buck the trend and get your financial house in order. Understanding the basics of personal finance is like holding a map to financial wellness, and while not easy, simply getting started on the path is more than many will do in their lives.

Remember, every small step towards managing debt, saving for retirement, or saving a percentage of your income is an investment in your future.

Growth of Credit Card Debt by Americans

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