6 Personal Finance Stats That Will Inspire You To Get Your Money Organized

Americans need help saving.

How many times have you seen a headline about this? Probably quite a few times.

And no, it’s not just Millennials. Americans across the country, of all ages, fall into the need-help bucket when it comes to their money.

But have you taken the time to look at some of the findings and statistics behind the claims?

The numbers are quite alarming and provide a very realistic, and unfortunate, view of how serious the issue is.

I’d even go as far saying that they’re even worse than you might have first guessed.

The fact is that the majority need help. Yet, the irony is that most of us neglect asking for help.  

But how bad has it gotten and are you the exception or the rule when it comes to savings statistics?

1. More than half of millennials don’t have retirement savings.

According to the National Institute on Retirement Security (NIRS), a whopping 66% of Millennials have zero in their retirement savings.

Really, what this means is that 66% of Millennials are jeopardizing their financial future by putting it at risk. Whether they know it or not. For a variety of reasons, it just seems like the Millennial generation cannot seem to get a grip on the topic of retirement.

The probable cause is likely a combination between living paycheck-to-paycheck, drowning in debts, a lack of financial literacy, and a mindset of thinking they’ll have plenty of time to worry about retirement later on.

Unfortunately, the more retirement planning is put off, the harder it becomes to start saving and investing for your retirement. There’s also no such thing as being too prepared or starting too early when it comes to your money and your future.

In fact, it’s quite the opposite. The sooner you can start saving money on a monthly basis, the more financially secure you will end up.

Always keep that in mind.

via GIPHY

2. Almost all millennials who are saving still aren’t saving enough.

Again, according to the National Institute on Retirement Security (NIRS), 95% of Millennials are saving less than what is being recommended to them.

Only 5% are saving an amount that experts recommend.

Believe me, I completely get it. When I was in my twenties, notably my early twenties, saving money was not top of mind. And if it was, I hardly had the means to commit to saving anywhere close to an amount that was recommended to me.

So I fully understand where you might be coming from. Saving doesn’t seem as significant as others are making it out to be. You have a few years before you need to start prioritizing your savings habits.

Hold up just for one minute. If this is what you’re thinking, you need to seriously stop right there.

Let me ask you a question. You want to be worry free (financially) when you retire, right?

Of course you do. You wouldn’t be reading this article if you didn’t.

Well, then you need to look at the full picture and better understand the impact that your current savings habits have on your retirement and on your future lifestyle.

If you’re part of the 95% of Millennials that are saving less than what’s recommended, then chances are you’re either: Pushing back the age when you’ll be able to retire comfortably, or setting yourself up to put a lot of financial strain on your life as you near in on your retirement by trying to “catch up” with your savings. But it’s likely you’ll do both.

The amount of money you are saving monthly has a direct impact on your financial success, notably on your retirement outcome, and the lifestyle you’ll be living throughout your retirement years.

3. Only 30% of households are financially ready for an emergency

According to the Associated Press, somewhere around 69% of households in the United States have less than $1,000 in savings to their name to cover an emergency.

That’s not to say that these same households do not have this amount of money tucked away in investments or retirement accounts, but rather they do not have the liquidity to cover for financial emergencies.

This is another shocking number that provides a little more clarity about the current state of personal finances within American households. Specifically, about how much households are struggling with their finances.

Here are a few key takeaways from this one are:

• Americans undervalue and underestimate how critical emergency savings are
• Americans have a lot of their money tied up in debts, making it hard to both invest for retirement and build an adequate emergency fund at the same time. They’re finding themselves choosing between one or the other.
• Americans lack financial literacy, which makes decision making and understanding your options seem next to impossible

Unfortunately, one important lesson we’ve learned from COVID-19 pandemic is this: Financial emergencies do happen, and when they do, you’ll wish you had an emergency fund.

4. Even tax incentives can’t make households take advantage of college savings accounts

According to the Federal Reserve, only 2.5% of households in the United States are utilizing 529 college savings accounts.  

And yes, you read that correctly. This means that 97.5% of households are NOT taking advantage of the benefits that 529 plans can have for their children’s education.

Given the importance of post-secondary education, and how expensive college tuition (and other expenses) can be, it’s surprising that the numbers are what they are.

To me, the first thing I immediately think of is the money that’s left on the table. 529 plans act as great investment vehicles that also come with tax-advantaged benefits. Over the years, this easily accumulates to well over thousands of dollars in benefits alone.

The other side of it, is to think about the position it leaves most families in. Both the impact it has on the parents and the children. For the parents, as they lose out on the benefits associated with 529 plans, it likely means they are netting losses where there could be gains.

For the children, unfortunately this means that a good majority of them are forced to take on student debt loans which can jeopardize their financial future immediately after graduation.

5. Debt is becoming the new norm

According to USA Today, somewhere around 38% of households are burdened by credit card debts.

This type of revolving debt can have serious implications. Not only is it detrimental to your financial standing, it can take a toll on your emotional health and the decisions you make.  

What might be even worse with this number is that a large majority of these households remain unaware of the fees and interest amounts they are paying.

Additionally, they remain unaware of the debt repayment and consolidation solutions that are available to them. Some of which can help tackle their current debts in a very cost-effective way.

When you start combining credit card debt with other types of consumer debts such as student loan debts, automotive loans and mortgage loans, you realize how bad the situation really is.

In fact, it’s why the bankruptcy means test becomes a real option for households that are unable to consolidate their debts.

6. Almost ¾ of households are not planning their financial futures

Last, but certainly not least, we need to talk about financial planning and the amount of (or lack thereof) households that are properly planning their finances.

According to Charles Schwab, somewhere around 72% of households in the United States do not have a written financial plan.

This one seems high, but it certainly makes a ton of sense when you think about it.

Traditionally, financial planning has always been reserved for those with wealth, status, and adequate literacy around how to obtain a financial plan. Which has left the majority of households without access to a financial plan.

When you start thinking about the numbers even more. You start to create a holistic view of why some of these other statistics (above) exist. Without proper planning, and even financial literacy, the majority of Americans are naturally subject to navigating their financial life without clarity. This leads to mismanagement, poor financial decisions, and financial strain to say the least.

Our friends at Savology, did a little research to determine the impact of financial planning and outcomes. We found that households with financial plans are 2.5X more likely to reach their retirement goals. On top of that, 83% of people that set financial goals feel better about their finances after just one year.

I think it’s pretty safe to say that having a plan for your finances is one of the best things you can do to succeed financially.

If we’re this behind should we even start planning and investing in your financial future?

All of these statistics point to two major takeaways. The first, is that financial literacy needs to be made a priority. The second, is that without proper planning, you’ll find yourself in challenging financial situations.

It’s also easy to see that all of the different areas in your financial life influence one another, which lends support for another important reason as to why properly planning your finances is critical.

With confidence, clarity, and direction, your financial plan will help you navigate your financial life to make sure that you are making sound financial decisions and improving your financial security.