18 Startling Personal Finance Statistics

Personal Finance Statistics
GUIDE
Andrea Woroch
By: Andrea Woroch
Posted: September 21, 2020
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People don’t like talking about personal finances, but the more open we are when it comes to our money, our budgets, our savings, and our debts, the more opportunities to learn from each other and remedy our mistakes while building a better future.

If you aren’t ready yet to have these discussions with family or friends, find out how your financial habits stack up to the rest of America and see what you can learn about money by diving into these personal finance statistics. In some cases, you may even feel better about your own financial situation.

Here are 18 startling stats about personal finances in America.

1. Americans Are On Pace to Retire Broke

Retirement seems light years away when you’re young, and planning for this time may be the least of your concerns. However, ignoring retirement planning when it seems to matter least can have a major negative impact later.

In fact, the 2019 Retirement Study from GoBankingRates.com found that 64% of American workers are expected to retire with less than $10,000 in their retirement savings accounts, while close to half of all respondents claimed they had no money set aside for retirement.

Meanwhile, the 2018 Planning & Progress Study by Northwestern Mutual reports that 43% of U.S. workers anticipate outliving their retirement savings. Hopefully, these stats are enough to motivate younger people to start preparing early.

2. Bank Fees Are On the Rise During Pandemic

With high unemployment rates and shrinking bank balances, the last thing consumers want to waste their dollars on are bank fees like checking account maintenance and overdraft protection. But, unfortunately, as banks lose money, they try to make up for it in other areas, even if it’s hitting their customers’ wallets harder.

Monthly maintenance fees for checking accounts rose to an all-time high in 2020, smack in the middle of the pandemic, according to the Checking Account Fee Survey by MoneyRates. The average monthly maintenance fee on a checking account is now $14.39.

MoneyRates Chart of Banking Fees

Over the course of a full year, you’re looking at paying $172.68 — regardless of how you use the account

3. Financial Gender Gaps Remain High

Wages aren’t the only area where there’s a wide gender gap in the financial space. The amount of savings men have accumulated compared to women is substantially higher.

Nearly 50% of men saved money in August, compared to only 30% of women, according to the August 2020 Monthly Savings Index from MagnifyMoney. Closing these financial gender gaps requires education and open conversations about money so women can learn from each other.

If you can talk about dating and dieting, you can talk about issues such as debt and savings.

4. Younger Generations Aren’t Planning for the Future

When it comes to planning for old age, the sooner you start saving, the more money you will have accumulated for retirement, thanks to compounded interest. However, many younger generations are not prioritizing their futures.

Research from the National Institute on Retirement Security found that 66% of millennials don’t have any money put away for their golden years.

Millennials' Retirement Savings

Meanwhile, this same research found that even though two-thirds of millennials work for an employer that offers a retirement plan, only 34.3% of millennials participate in their employer’s plan.

5. Money is a Leading Source of Stress

Stress can wreak havoc on your overall well-being, but alleviating anxiety may require you to dig deep into your finances more than any other matter. In fact, the 2018 Planning & Progress Study by Northwestern Mutual found that 44% of respondents cite money matters as the dominant source of stress in their lives, more than personal relationships or work.

As a result, 28% of Americans say they feel depressed at least monthly, with 17% suffering depression as often as weekly, daily, and even hourly as a result.

6. Americans Blow $324,000 On Impulse Buys Over Their Lifetime

When presented with a shiny new object or even a mouth-watering dish, many consumers can not resist the temptation to splurge, even if it’s not in their budget. But such impulse purchases come at a high cost.

A 2018 survey on impulse shopping habits conducted by Slickdeals.net found that shoppers blow around $5,400 a year on impulse purchases, which amounts to a shocking $324,000 over a lifetime.

Impulse Spending Infographic from Slickdeals.net

When looking at what types of items consumers tend to impulse-buy more often, over 70% of respondents cited food as their top unplanned purchase. Next on the list of most common impulse purchases was clothing at 53%, followed by household goods (33%), take out (29%), and shoes (28%).

7. Millennials Are the Most Underpaid Generation

Graduating college during one of the biggest financial downturns in America’s history left millennials faced with a bleak job market, competing for opportunities with more experienced workers and settling for underpaying positions. When compared to previous generations, it’s clear millennials are the most underpaid generation and way behind in reaching life milestones as a result.

In fact, a study on The Financial Health of Young America by the nonprofit Young Invincibles found that millennials earn 20% less than baby boomers did at the same stage in life and have earned a net wealth that is half of that of boomers at the same age. Not to mention, boomers as young adults owned twice the amount of assets as millennials do.

8. Most Americans Underestimate Spending on Subscriptions

The set-it-and-forget-it subscription model is convenient, but it can be a budget drain if you aren’t paying attention to your bills. Unfortunately, many U.S. consumers have no idea how much they spend on monthly services.

The average American pays $237 a month for subscription services, according to a 2019 report from West Monroe Partners. Yet 84% of these consumers underestimated the total they spent every month on these fees, and only 6% estimated their total spend correctly.

America’s relationship with subscription services

Running a sweep of your bank and credit card accounts can help you pinpoint these recurring bills so you can cancel those you don’t need or use to free up some extra cash.

9. Parents Go into Debt to Please Kids

Raising a family comes with higher living costs, but not everything parents spend money on is a necessity. Many mothers and fathers are willing to spend more to give their kids things they didn’t have themselves growing up, especially when the holidays roll around.

Almost 65% of parents with children under 18 said they would be fine with adding to their card debt during the holiday season and more than half (56%) said that it was fine to do so, according to a poll conducted by CreditCards.com.

Although surprising your child with a special treat under the tree is a fun tradition, make sure to shop savvy and not go overboard.

10. Consumers Consider Holiday Debt Acceptable

Holiday shoppers racked up an average of $1,325 of debt in 2019, according to an annual survey conducted by MagnifyMoney. This study also found that Gen Xers added the most debt, charging an average of $2,076.

MagnifyMoney Holiday Debt 2015 - 2019

Meanwhile, more than half of the respondents admitted they were stressed about their holiday debt, and 78% of those with holiday debt won’t be able to pay it off come January. In most cases, however, this means accruing additional interest, so any deal scored over Black Friday will be wiped away by these added fees.

In fact, a quick calculation can help you figure out how much you paid in interest over the time it took you to pay down the balance.

11. Down Payment Savings Create Hurdles to Homeownership

Owning a home remains a priority for many Americans, especially millennials who prioritize purchasing a home before getting married, paying off debt, and traveling, according to the latest COUNTRY Financial Security Index®.

However, this same survey found that prospective homebuyers delay buying because they struggle to save up enough for a down payment. In fact, 46% of millennials and 40% of Americans overall cited affording a down payment as the greatest financial barrier to homeownership.

12. Financial Woes Keep Consumers Up at Night

Getting a good night’s sleep is essential to overall health, but many Americans are tossing and turning from ongoing financial woes. In fact, a 2020 survey from Bankrate found that 48% of U.S. adults report losing sleep over a financial issue at least occasionally. The good news: That number is down from 56% just a year ago.

Meanwhile, 23% of consumers say the main concern keeping them up at night is their ability, or lack thereof, to pay everyday bills. Making a financial plan and setting a budget can help you feel more in control of your overall money and taking this first step can help you sleep better at night.

13. More than Half of Homeowners Struggle to Pay Their Mortgage

When you buy a home, you likely calculate the estimated mortgage cost and feel good about what you can afford. But many new homeowners overlook all the additional costs that go along with mortgage payments, including taxes, insurance, repairs, maintenance, utilities, and other expenses.

This can take a bit out of your budget if you don’t plan properly. A survey of 2,000 American homeowners from 72Point and the National Association of Realtors found that 52% of people surveyed are routinely concerned about making their mortgage payments.

14. Dads Spend More than Mom on Their Kids

It’s no surprise that raising kids in America isn’t cheap. But just how much parents dish out on their children every year can be mind-blowing, especially when you look at the state-by-state figures. A survey from OppsLoans found that the average parent across the country spends $9,470 every year on each of their kids.

Parent Spending by State

However, these estimates shift dramatically from state to state. Most notably, parents in Washington D.C. spend the most, spending a whopping $17,921 on each kid per year, while parents in Montana spend the least at only $2,000 annually.

Perhaps even more interesting though is which parent tends to spend the most. In fact, this study found that American dads spend about $9,486 annually per kid, while the typical American mom spends just $8,789.

15. Happiness Rises with Income Only to a Point

The adage “money doesn’t buy happiness” may not quite hit the mark these days. A 2018 study from Purdue University published in the Journal of Nature Human Behavior set out to identify global points of income satiation. The study found that individuals said they generally felt greater life satisfaction when they earned $95,000 annually, and attained emotional well-being when they earned $60,000 to $75,000 a year.

Interestingly, earning six figures had a negative effect on a person’s happiness. This study found that those who earned more than $105,000 reported decreased satisfaction.

16. Fighting Over Finances Can Ruin a Marriage

Disagreements over money are the number one issue couples say they argue about and the second-leading cause of divorce, behind infidelity, according to a 2018 survey by Ramsey Solutions. Specifically, the study found that the higher a couple’s debt burden, the more likely they are to argue about money.

Meanwhile, 86% of couples who got married in the last five years started out in debt and 41% of these debt-ladened couples say they argue about money often. However, this doesn’t mean your marriage is doomed.

Graph courtesy of Money.com

Talking about money and setting a budget can pave the way to a happily ever after. For instance, the same survey found that 94% of respondents who say they have a great marriage said they discuss their money dreams with their spouse, and 87% of happily married couples say they work with each other to set long-term financial goals.

17. Upper-Middle Earners Are Scraping By

Nearly 6 out of 10 Americans say they live paycheck to paycheck, as reported by the 2019 Wealth Index Survey by Charles Schwab, which puts a lot of pressure on everyday living. While making more money seems like the easy solution for alleviating a tight budget, one survey found that even individuals earning six figures are in no better position.

According to the Global Benefits Attitudes Survey from Willis Towers Watson, 18% of employees making more than $100,000 annually say they live paycheck to paycheck. Financial health can be improved when you earn more, but only if you are watching your spending. Some people increase their spending when their income increases and this can put them in a troubling financial spot.

18. Social Media Envy Fuels Excessive Spending

Thanks to social media and FOMO — the fear of missing out — there’s added pressure to spend money even when you don’t have it. Although this affects all generations, it appears millennials are the most likely to succumb to overspending from outside influences.

The Charles Schwab’s 2019 Modern Wealth Index survey found that 48% of millennials spend more money than they can afford to participate in experiences with friends and 49% were influenced by social media to spend money on experiences.

Charles Schwab Modern Wealth Survey Graphic

If social media is making you feel pressured to keep up with a lifestyle you can’t afford, it’s time to rethink who you’re following or consider taking a break from Instagram and Facebook.