5 Facts That Prove Americans Suck at Managing Money

Credit cards in the back pocket of a pair of jeans

The United States is often referred to as “the richest country in the world”. Based on GDP that might be true, however that doesn’t mean that the citizens in the United States are good at managing their money. If you ask me, Americans have rich people tastes, but a poor mans wallet. So I’m going to share with you 5 of the most mind blowing personal finance facts about Americans, that you won’t believe could possibly be true. Unfortunately they are.

The Average U.S. Household Has $6,849 in Credit Card Debt

(Source-nerdwallet.com)

Yes. Believe it or not the average household in America has nearly $7,000 in credit card debt. That is insane! The worst part about this is that not only does this mean you are most likely living above your means, but that you are paying interest that does nothing but damage your financial situation. When my credit card balance was at $7,000, I was paying about $200 a month, and getting hit with over $100 worth of interest. Meaning that I was only really paying like $90 towards my overall balance. For me to have paid it off making only the minimum payment, it would have taken me YEARS. That $200 a month could have been put to better use going into a savings, investment, or retirement account instead of being wasted on interest.

Solution

Pay off your monthly balance every month. If you are already someone who has a large amount of credit card debt, start figuring out ways to add some extra money on top of what you are required to pay each month, or look into debt payment methods like the Snowball Method to try and knock off your debt little by little. Remember, the more you pay, the faster you can kiss your credit card debt goodbye.

58% of Americans Have Less Than $1,000 in Their Savings

(Source-finance.yahoo.com)

This is the statistic that I always hear people referring to, and it blows my mind. Do you know how easily you could run into an expense that costs over $1,000? A car accident, medical emergency, your basement floods, etc. This is most likely one of the main reasons that Americans have racked up the crazy credit card debts that they have. In the case of an emergency, we just throw it on the credit card and stop worrying about it. In all reality, we are just kicking the can down the road. This doesn’t help our situation at all.

Solution

Figure out a savings plan. I’m not saying that you have to be like the people on Extreme Cheapskates, because there is no need to eat leftovers out of the dumpster or carry a single lightbulb with you to each room that you enter. What I mean by a savings plan, is that you figure out ways to contribute to your savings account each month or each paycheck. A nice easy way to do this is to follow the 50/30/20 rule, which means that 20% of your paycheck goes into your savings and you don’t touch it. Or you could simple find a set amount, like $50, and take it from your paycheck every time. Whatever you decide to do, figure out a way to save more money. Be the smart and financially responsible 42%!

64% of Americans Will Retire With Less Than $10,000

(Source-gobankingrates.com)

Go ahead and read that one more time. How is it even possible to retire on $10,000? The truth is that it isn’t. This is the reason that many people find themselves working late into their sixties and seventies. Think about how much money you spend every year. I would be willing to bet that you spend far more than $10,000 each years, so you can see why this is a serious issue.

Solution

Start thinking about your retirement now. I know that for some of us it might seem like a lifetime (literally) away, but it is going to come around sooner than you think. Start building your retirement fund, and take advantage of retirement packages and 401k matches that are offered by your employer. Start worrying about your retirement now so that you can spend it playing golf and sitting on the beach, instead of greeting people at Walmart.

Americans Paid Banks $113 Billion in Credit Card Interest and Fees in 2018

(Source-magnifymoney.com)

Interest is the price that you pay for the privilege of using the banks money. It is also the penalty that you pay for relying on the banks money to support you, instead of figuring out ways to handle your expenses without going into debt. Americans are clearly very good at living off of their credit cards, instead of their paychecks. Maybe if schools taught us some financial literacy or basic budgeting skills, we would be better prepared.

Solution

Pay off your credit cards as fast as you can, and once they are paid off, avoid having any expenses that carry over to the next month. This is where interest plays a part. Paying your credit card bill in full each month not only boosts your credit score, but it also keeps you from wasting money on interest fees. Not to mention, paying off your credit card balance consistently will let the lender know that you can be trusted, and they may reward you with special perks like cash back discounts, or a higher credit limit.

Only 32% of Americans Prepare a Monthly Household Budget

(Source-news.gallup.com)

Considering that the word budget is in the name of my blog, it is safe to assume that I have a pretty strong opinion about budgeting. Without a budget there is no real way to know how much money is coming in and how much money is going out. The fact that so many people neglect the idea of budgeting, has implications that cause so many other problems. Not knowing your budget could cause you to save less, spend more, and end up in debt.

Solution

Write a freaking budget! It is not at all a difficult process, and a rough budget can take you less than 10 minutes. Having a budget helps you to see how much extra money you should have at the end of the month, and will help you to figure out areas in which you could cut back on your spending. Chances are you have some expenses that are unnecessary, and the only way to figure this out is to write a budget for your household.

Thanks for Reading!

If there is one thing that I hope you have learned from this post, it is that Americans have some really bad money habits, but that doesn’t mean that you can’t learn from them! Make sure that you are actively thinking about you money, both now and for the future. Nobody else is concerned about your situation because they are too busy worrying about their own. Hold yourself accountable and be the best that you can be.

Like spelled out with tiles

If you enjoyed this post, leave a like or subscribe to the blog to stay updated when new content is posted. Let me know in the comments, which one of these facts surprised you the most? Thank you so much for taking the time to read this post and I hope you learned something new!

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