It’s amazing how much I’ve read and learned about money and finances over the last few years. There are thousands of statistics that I’ve seen and I’m surprised again and again by the amount of scary financial statistics that I see.
As a personal finance blogger, I oftentimes research before publishing a post. That makes sure that I take all perspectives into account and have a full overview.
I’ve done some more research on the various stats I’ve encountered over the last few years. The results are shocking, to say the least!
The money stats in this post might scare you, but I hope that they will motivate you to improve your finances and be better than the average person.
If you’re already doing better than the average person, keep growing and learning. These scary financial statistics are so shocking, that even if you’re doing slightly better than average there is still a lot to learn.
You should always strive to be your highest self, to do your best, and to strive for a financially happy and successful life.
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Let’s dive straight in the scary financial statistics, to motivate you to get your finances in order!
Money Statistics That Might Scare You
1. 59% Of Americans Live Paycheck To Paycheck
This one belongs among the scary financial statistics for sure!
According to a survey done by Charles Schwab, 59% of Americans are currently living paycheck to paycheck. That’s a lot of people!
If you’re living paycheck to paycheck, try to get out of this situation as soon as you can. A way to do this can be budgeting your money, where you create a budget that works for you. When you create a budget, you know exactly 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.
No matter what happens, you know you can cover whatever curveball life is throwing at you!
This ease around money is invaluable and can come in handy when things break or major maintenance needs to be done.
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2. 67% Of Americans Struggles 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. The majority of Americans (67%) can’t come up with a $1,000 fund in case of an emergency, according to NORC.
Even families with an income of over $100,000 don’t have enough money to come up with a $1,000 emergency fund! Meaning that it’s not only about what you earn, but also about what you spend.
In the previous step, we’ve talked about budgeting. Now it’s time to step up our game and take it to the next level.
Go build your emergency fund!
How much you need for an emergency fund can vary from person to person, but I would recommend a minimum of 3 months of expenses. Ideally, you would have 6 months of expenses in your emergency fund.
I like to be comfortable with my emergency savings, knowing that I can cover anything that life throws my way. Your number may vary, depending on how much (high interest) debt you have or if you have an irregular income.
It’s okay if building up your emergency fund costs several months. Take your time, it’s important to feel financially safe.
When you’re feeling financially safe, you can really start to work towards your financial goals. You can strive towards reaching your full financial potential. That’s what it is eventually all about!
3. Only 24% Of Millennials Have Basic Financial Literacy
From all the respondents in this particular study, 69% considers themselves financially knowledgeable. When they were tested, only 24% showed basic financial knowledge and 8% high financial knowledge.
It’s interesting that people think they are financially literate, while they actually don’t have sufficient knowledge to call themselves financially literate.
What does that mean? Learn, grow, and adjust.
It’s extremely 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. I love to alternate between reading and listening. When I’m reading I retain more of the information, but when I’m listening it’s more relaxed and I don’t need my full attention.
You’ll notice that curiosity and interest when it comes to finances really is all you need. When you’re willing to learn, you will grow so so much.
It’s an eternal cycle. You learn, grow, and adjust. By adjusting your learn more, grow, and adjust again.
You will never be finished with learning, growing, and adjusting. This is a beautiful thing. All we need in life is to be constantly evolving and improving, to reach your full financial potential!
4. 21% Of Americans Don’t Save Anything Of Their Annual Income
Wow, 21% of Americans don’t save ANYTHING of their annual income according to CNBC. That’s one in five people who aren’t saving a single penny per month! That is one of the top scary financial statistics out there, in my opinon.
Sure housing prices and college costs have risen significantly, but it’s up to you to take charge of your finances and still save something. Anything!
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. Automate Your Savings
Pay yourself first and use investment vehicles like 401K or your regional pension regulations.
Automating your savings and using investment vehicles will make you save more without even realizing it! Especially when your pension savings are deducted pre-tax: you won’t get it on your bank account so you don’t notice it as much.
When you’re automating your savings, you always keep buying. This is the best investment advice out there: whatever you do, make sure you always keep buying new shares!
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!
Do the best you can in your current situation and see how quickly your finances will improve.
3. Bank Any Surplus
If you’re having a bonus or a pay raise, bank as much of that money as possible. If you’re not having it on your bank account, you’re less tempted to spend it all!
When you’re saving or investing any bonus or pay raise you receive, that’s a great financial habit that can go a long way.
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.
When a survey points out that 33% of the country doesn’t have anything saved for retirement, something needs to change.
Between today and retirement, many things may require you to spend money. You need to pay off your student loan, you have credit card debt, car debt, a mortgage, or your income is low.
The survey found that 56% have less than $10,000 saved for retirement. Besides this, 33% of Americans have nothing saved for retirement. $0, zero dollars. Nothing, noppes, nada.
That’s scary, to say the least.
When you want to retire early or at all, it’s good to have some retirement savings set aside for when you’re older.
If you live in a country where retirement savings are not done automatically, you need to take care of it yourself. I highly recommend putting 10-15% of your salary towards retirement savings, preferably pre-tax to maximize your contribution.
Why Do People Struggle So Much Financially?
People struggle a lot financially, which is something that I’ve noticed from close by when my stepdad lost his job in the 2008 crisis and my mom was also forced to quit working.
What I’ve noticed from my mothers’ side, who now has a job and is working, is that wages have stayed stagnant. Depending on the sector you’re in, wages have been somewhat flat since over the last 10 years.
If there is something that hasn’t stayed flat, it is the prices. Prices of services, prices of consumer goods, princes of houses, prices of electricity.
Because of the rising prices in combination with stagnant wages, it’s hard for people to stay financially healthy. There is less money at the end of the month, meaning some people would need to go into debt. Others would need to sacrifice things like retirement savings.
People Are Taking On Too Much Debt
In general, people are taking on too much debt. Whether it’s credit card debt, a mortgage, car loans, or student loans.
Part of that is keeping up with the Joneses, where people are continuously comparing themselves with others. They need to have the same car as the neighbors, a big house like their friends, and they believe the commercials on TV that they see.
Every time it is something else that you need to buy in order to keep up. The thing is, it keeps on changing and you keep on buying new things.
Outside forces are stimulating you as well to buy new things and to keep the consumer mentality. Try to break free from that.
Sell things in your home, embrace minimalism and don’t replace things until they are worn out and broken. We don’t need more stuff to be consumed. In order to be financially healthy, be aware of what you are consuming and why!
Are you surprised by these scary financial statistics? Do you have any more interesting money stats?
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