Personal finance relates to a household’s saving and spending. Everyone needs to think about how they can earn enough money to pay all their bills as well as save for the future. Unfortunately, research shows that many people aren’t putting enough money aside or making smart investments for retirement. Sometimes, it’s simply a matter of not earning enough, while other times, it’s a matter of poor financial decisions.
What are some of the top personal finance statistics that showcase how people are doing financially? Below is some information that can shed some light on the challenges that people face today.
- By the end of 2020, total consumer debt was around $14.6 trillion, and total mortgage debt reached roughly $10.3 trillion.9,12
- The average FICO® score was 710 in 2020.11
- Nearly half the adults in the U.S. say they sometimes lose sleep over money problems.7
- In the U.S., 62% of adults have a car loan, 14% have a student loan, and 22% have a personal loan as of 2020.11
- 55% of U.S. adults invested in the stock market in 2020.8
Spending vs. Saving: How People Use the Money They Earn
Budgeting is all about knowing how much money you can earn versus how much money you can spend to ensure you will still be able to have enough in savings to cover unexpected expenses, special occasions, retirement, and everything in between. Unfortunately, most people struggle with properly budgeting.
- Earning a high salary doesn’t automatically mean someone will be financially stable. In fact, 18% of people who make more than $100,000 each year have admitted to living paycheck to paycheck.1
- Before the COVID-19 pandemic struck, about 59% of U.S. adults were living paycheck to paycheck in 2019. As of July of that year, 28% of them didn’t have emergency funds available.1
- Some people can’t, or choose not to, save for a rainy day. Around 29.2% of people in the U.S. don’t put any of their income into savings, according to a survey.1,17
- Subscription services add up. But, in a survey, 84% of people underestimated how much they spend monthly on these services, and most of them were off by $100-199.6
- The average credit card balance in 2020 was around $5,300.11
- In the U.S., the median savings account balance was $3,500 in 2020. And those who kept a separate account for emergencies showed a median balance of $2,000.14
- According to a survey conducted in 2020, nearly 3% of people have $0 in a non-retirement savings account. Most people (roughly 22%) have $1,001 to $5,000 in a savings account. And about 4.38% of people have more than $100,000 in this type of account.14
A Surprising Amount of Debt
Many people are in debt in some way or another, whether it is credit card debt or student loan debt.
- In 2020, the average personal debt in the United States was nearly $93,000.13
- Student loan debt is serious, with Americans owing more than $1.5 trillion in total as of the first quarter of 2020. Many people who choose to take on this type of debt may fail to calculate monthly payments accurately prior to getting their loan.1,2
- In 2020, 52% of homeowners stated that they were worried about being able to make their mortgage payments.10
- In 2020, the average auto loan balance was $19,703. The average personal loan balance was $16,458. And the average student loan balance was $38,792.11
- The average mortgage balance grew to $208,185 in 2020, and around 44% of people in the U.S. had a mortgage.12
Saving Up for Retirement
Relying solely on Social Security isn’t enough for most people who are living in retirement, so many individuals take steps to save money while they are young. With strategic planning and careful budgeting, you can have a surprising amount saved by the time you’re ready to stop working. Unfortunately, not everyone takes this important step.
- In 2019, a survey found that 38% of people felt that saving enough for retirement was a major source of financial stress.3
- The average annual contribution to a 401(k) was $8,788 in 2019.3
- In 2019, 62% of people stated that they needed to catch up on their retirement savings. More specifically, 66% of millennials, 73% of Generation X, and 51% of Boomers said they weren’t doing as well as they should when it came to saving for retirement.15
- According to AARP, 59% of people felt that it was only somewhat likely, or not at all likely, that their Social Security benefits, along with their savings and investments, would be enough for retirement.4
- In 2019, nearly 19% of people in the U.S. anticipated retiring with less than $10,000 in retirement savings, and roughly 45% of people had no retirement savings at all. This means that roughly 64% were expected to retire broke.5
- People face various challenges that prevent them from saving enough for retirement. The top reason for not having any money in retirement savings: not earning enough money.5
- The top reason Americans lose sleep over their finances is: saving enough for retirement.7
How Much Do People Know About Personal Finance?
One of the problems that may hold people back from being financially successful is a lack of financial literacy. After all, if someone does not know how to spend and save their money strategically, they are more likely to encounter financial troubles.
- In 2020, a data study found that Michigan was the state that ranked as the most financially literate, while West Virginia ranked as the least financially literate.1
- In 2019, although roughly 70% of high school students were given the option of taking a personal finance elective, less than 17% of them were required to take a minimum of just one semester on the subject of personal finance.1,16
Overall, many Americans struggle with their finances, and many carry a lot of debt, whether it is in the form of a mortgage, student loan, auto loan, or combination of loans. Taking steps to become more financially literate, and to create a monthly budget that will allow for more savings, is a smart strategy that everyone should consider.