Americans in general Are In A Precarious Situation With Their Personal Finances. As the ole saying going:
It’s not how much you make, but how much you keep that matters.
I think the issue start with our education system. In case you don’t know it SUCKS! Sure we can find the slope of a line, and we can solve mathematical proofs – but we aren’t taught about interest, how to balance a budget (or even create one). When we leave high school we have ZERO understanding about debt, and to make matters worse this is exactly the time most of us rack up enough debt to buy a house for college.
Something needs to be done about this or our precarious situation will get a lot worse for our personal finances!
I was shocked when I read this article by Dailyfinance. It shows just how bad things have gotten.
Good and Bad News
Perhaps unsurprisingly, the Fed’s report reflects as much bad news as good news about how the economy and our own spending habits have impacted our financial well-being over the past 18 months.
The Fed’s survey questions are designed to gauge individuals’ financial well-being and monitor their recovery from the recession. Topic areas include housing, retirement planning, access to credit and more.
Key findings include the following:
Economic fragility: The good news is that less than one-quarter of respondents said they or a relative they live with had experienced a financial hardship in the prior year. However, the bad news is that 47 percent said they couldn’t cover a $400 emergency expense without selling something or borrowing money.
Savings and spending: 63 percent of respondents said they saved some money the prior year, but 20 percent said their spending exceeded their income.
Banking and credit: 56 percent of respondents with at least one credit card said they always paid the bill in full the prior year. About one-third of respondents who had applied for credit in the prior year said they were turned down or given less credit than they requested.
Retirement: This is pretty much all bad news. Among people who had yet to retire:
31 percent had no retirement savings or pension.
39 percent had given little to no thought to financial retirement planning.
45 percent of those who planned to retire expected to continue working in some capacity during retirement.
More than 50 percent of those with self-directed retirement accounts were “not confident” or “slightly confident” in how they invested the money in those accounts.