Lisa Jennings
In May we had a post called Why Americans Can’t Keep Lifestyle Spending in Check. It linked to an article discussing a survey by SunTrust Bank showing that many higher income households are living paycheck to paycheck and are not saving as much as they should. An overwhelming 68% of the respondents blamed dining out as the main reason.
Also in May, the Federal Reserve released a Report on the Economic Well-Being of U.S. Households in 2014 which is a 99 page report full of graphs, statistics and all the questions they asked in their survey. Although it will probably bore you to death, it has some interesting key findings. The biggest one is that 47% of respondents said they do not have the money to cover an emergency expense costing $400 and they would have to either borrow the money or sell something to pay for it.
There is no doubt that Americans are struggling to save. Over the past couple of weeks, I’ve seen more and more articles discussing these two surveys. These surveys, and other ones specifically about savings, prompted me to write How Much Money Should You Be Saving? Today, let’s look at more of the statistics from the Fed report. As you review them, think about where you fit in each of these areas.
The Fed report had some good news and bad news. Here are a few that grabbed my attention:
Good News
- Sixty-five percent of respondents report that their families are either “doing okay” or “living comfortably” financially, compared to 62 percent in 2013.
- Just under one-quarter of respondents indicate that they or a family member living with them experienced some form of financial hardship in the year prior to the survey (this is actually good news, better than it used to be)
- Sixty-three percent of respondents indicate that they saved at least some money in the past year.
Bad News
- Forty-seven percent of respondents say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money (already mentioned this statistic, but it jumps to 2/3 for those with a household income under $40,000)
- Twenty percent of respondents report that their spending exceeded their income in the 12 months prior to the survey. (no wonder people are in debt and struggle to save!)
- One-fifth of respondents have no bank account or have used some form of alternative financial service in the past year. (“alternative” to me is another name for “expensive”, so I’ll put this in the not good category)
- Among respondents who borrowed for their own education, those who failed to complete an associate degree or bachelor’s degree, those who attended for-profit institutions, and those who were first generation college students are more likely to be behind on their payments than others. (Well, duh. Whether you finish college or not, you still have to pay back the loans. And if you drop out you are less likely to have a decent job.)
- Thirty-nine percent of non-retirees have given little or no thought to financial planning for retirement and 31 percent have no retirement savings or pension. (Are you kidding me?!? This is scary. Seriously scary. In fact, pretty much all the retirement news wasn’t good.)
- Over one-half of non-retirees with self-directed retirement accounts are either “not confident” or only “slightly confident” in their ability to make the right investment decisions when investing the money in these accounts. (yeah…I’m guilty of this one)
Good and Bad
- Seventy-six percent of respondents have at least one credit card. Of those with a credit card, a slight majority (56 percent) report that they always paid their credit card bill in full in the previous year. (good and bad, depending on how you view credit card use–always pay off, or don’t use credit cards!)
We all have room for improvement, I know I do. I admit that our family eats out more than we should and that it’s a waste of money. And that we need to be more proactive with our retirement savings. What about you? Hopefully as you read these stats you thought about where you fit in. The time has come to put your financial life in order, stop overspending on your wants, set aside money for emergencies, get out of debt and look to the future.
