5 Scary Financial Statistics [& How To Avoid Them]

Money can be stressful, especially if you don’t have enough. Many aspire to have a financially stable life, which requires us to work on our finances. However, it can still be a challenge to get the resources to realize that.

Financial statistics can be valuable in guiding you to stability and motivating you in the new year. 

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1. 54% Of Americans Live Paycheck To Paycheck

According to a PYMNTS and LendingClub survey, 54% of Americans live paycheck to paycheck. In addition to that, 40% of people earning more than $100,000 per year said they lived paycheck to paycheck as well.

What you Can do?

If you’re living paycheck to paycheck, try to get out of this situation as soon as you can. One way to do this can be to create budget that works for you. When you create a budget, you know where your money is going. 

When you’ve identified where your money is going, it can be easier for you to cut unnecessary spending and only spend money on this that hold true value for you.

Another thing that budgeting might bring you is saving money or having a buffer. Having money as a buffer for when financial hardships are on their way is a great way to lower your stress around money.

This ease around money is invaluable and can come in handy when things break or significant maintenance needs to be done

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2. 61% of Americans Struggle To Pay A $1,000 Emergency

You’re having an unexpected $1,000 bill, like a car repair or need to fix your roof. Can’t afford it? You’re not the only one. According to Bankrate, most Americans (61%) can’t come up with a $1,000 fund in case of an emergency.

The statistic also includes families with an income of over $100,000 who don’t have enough money to come up with a $1,000 emergency.

What you Can do?

Luckily, even a little goes a long way. According to the Urban Institute, a saving cushion from $250 to $750 can avoid missing housing payment or eviction.

When you’re feeling financially safe, you can start to work on your emergency fund of three to six months of expenses. The emergency fund’s purpose is to reduce your need to take out debt when an emergency arises.

3. Only 24% Of Millennials Have Basic Financial Literacy

Of all the respondents in this study from the National Endowment for Financial Education, 69% consider themselves financially knowledgeable. When tested, only 24% showed basic financial knowledge, and 8% had high financial knowledge.

What you Can do?

What does that mean? Learn, grow, and adjust.

It’s important in this regard to learn from your money mistakes or lessons that your parents taught you. Another thing you can do is emerging yourself in financial things regularly by doing things like reading blog articles or watching videos on YouTube.

Your way of learning depends on what kind of learner you are. When you learn in these different kinds of ways, you will notice your financial knowledge will grow. You will be more geared towards starting to invest, saving more money, and making more money.

4. 21% Of Americans Don’t Save Anything Of Their Annual Income

21% of Americans don’t save anything from their annual income, according to CNBC. That’s one in five people that aren’t saving for retirement, financial emergencies, or other financial goals.

What you Can do?

Let’s discuss three quick strategies to increase your savings without any major life changes:

1. Start ASAP

The sooner you start saving, the less you’ll have to save. As you might know, the power of compound interest kicks in in that case.

2. Avoid Impulse Purchases

Over the past year, Slickdeals found that people spent an average of $3,300 on impulse shopping. That is up 51% from the previous year.

Impulsive purchases can influence your budget and spending, and avoiding them can give you the extra savings you need to fund your emergency fund. 

3. Automate Your Savings

Pay yourself first and use investment vehicles like 401(K) or your regional pension regulations.

Automating your savings and using investment vehicles will make you save more without even realizing it. Especially when you pay your pension savings pre-tax: you won’t get it on your bank account, so you don’t notice it as much. 

Even if you’re in a situation now where paying yourself first can be hard, like living on an irregular income, you can still budget.

5. 1 In 3 Americans Have Saved $0 For Retirement

Saving in general, and saving for retirement specifically, is something to bring specific attention to. A BankingRate survey pointed out that 33% of Americans doesn’t have anything saved for retirement.

The survey found that 56% have less than $10,000 saved for retirement. Besides this, 33% of Americans have nothing saved for retirement.

What You Can Do?

If you’re just starting out your career, start getting into the habit of saving early or go for a high-income profession. Even when you start small, starting sooner rather than later is recommended.

Saving or investing in your 401(K) and using the employer match can give you a good start. You don’t pay taxes on the money you contribute to these retirement accounts. According to the OECD, you will save an average of 22.4% when investing before taxes.

This post is published and syndicated by Radical FIRE.