It is safe to say that the last few years have been a financial roller-coaster. The COVID-19 pandemic left its mark on the world, and finance is not an exception. Huge market upswings and downswings, the highest inflation in 50 years, big swings in the housing market, etc., have all contributed to making for a wild ride for all of us.
In this article, we have dug into some of the most interesting personal finance statistics in recent times. They should serve as a spotlight for debunking common myths and hopefully show us all the room for improvement.
The current state of Personal Finance
1. Most Americans are unhappy and pessimistic about their finances
According to The State of Personal Finance Annual Report by Ramsey Solutions, only 24% of Americans said they had a better year financially in 2022 than in 2021. Also, only 40% of Americans are extremely or very optimistic about their financial future.
Although these numbers only show the emotional sentiment, we will later see that Americans are, on average, rightfully worried about their personal finances.
2. The number of Americans struggling with finances has increased by 45% over the last two years, sitting currently at 32%
According to the same report, the number of Americans who said they’re struggling or in crisis with their finances increased by 45% over the last two years and currently stands at almost a third of the population (32%).
A little more than half of Americans (54%) feel like they’re barely treading water and can’t get ahead with their finances. This can produce several issues, starting with an individual’s physical and mental health but also pouring over to major societal issues.
3. Women and Gen Z are more financially vulnerable than other groups
The same report states that women are significantly more likely to say they’re struggling with money than men (40% vs. 24%). We can only speculate on the various factors influencing this issue, such as the gender wage gap, financial violence, differences in access to financial knowledge/services, and more.
As far as the age groups go, Gen Z struggled with money the most at 40%, with Gen X coming in second at 35%.
4. More than half of Americans have less than $1000 in savings and live paycheck to paycheck
Maybe the most striking information from the report is that more than half of Americans have less than 1000$ in savings. Also, just over half of Americans (52%) said they live paycheck to paycheck, up 23% from just two years before.
Even higher earners haven’t escaped the paycheck-to-paycheck cycle. Over a third of Americans making over $100,000 (34%) live paycheck to paycheck. This shows that higher income is not a silver bullet that solves all personal finance problems.
5. About 60% of Americans don’t have a budget or maintain a financial plan, and 33% have $0 saved for retirement
According to some statistics, the majority (60%) of Americans don’t have a budget or maintain a financial plan. This is especially problematic when we combine it with many people’s dire financial situations.
Perhaps an even bigger alarm bell should ring for all the U.S. adults that didn’t save a dollar yet for their retirement. It is staggering that we are talking about one-third (33%) of the U.S. population in this regard.
6. The average American has around $5,000 in credit card debt and almost $20,000 in car loan balance
To make the situation a bit more dire, Americans are no strangers to consumer debt either. An average American has a credit card debt of $5,315 and a car loan balance of $19,703. This is one of the major personal finance pitfalls – buying liabilities on credit.
7. Debt (obviously) worsens matters, leading to higher stress levels, financial struggles, and difficulty paying the bills
We can all agree that debt, in general, is one of the major personal finance problems, especially in the U.S. Some of the interesting debt statistics from the aforementioned Ramsey Solutions report include:
- 64% of those with debt worry daily about money compared to just 45% of those without debt;
- 39% of those with debt said they’re struggling or in crisis when it comes to their finances compared to only 25% of those without debt;
- Over half of those with debt (62%) reported that they have difficulty paying bills compared to over a third (40%) of those without debt;
- 64% of those with debt said they’re living paycheck to paycheck compared to 39% of those without debt.
It is clear that removing debt from the personal finance equation can have a massively positive effect on one’s finances. Unfortunately, for some, it is easier said than done.
Financial Education Statistics
8. People with low levels of financial literacy are five times more likely to be unable to cover one month of living expenses than people with high levels of financial literacy
A Bankrate survey has shown that people who have received a financial education tend to have a higher level of financial literacy, which can lead to them being less likely to face financial difficulties.
More precisely, people with low levels of financial literacy were five times more likely to be unable to cover one month of living expenses when compared to people with high financial literacy.
9. 83% of U.S. adults consider parents being the most responsible for educating their children about personal finance, but only a handful talk to their children about it regularly
According to a survey by Momentive, a vast majority (83%) of U.S. adults consider parents the most responsible for their children’s financial education. The lack of standardized national personal finance education programs in the U.S. and other developed countries provides no other option but to take on this task independently.
At the same time, according to a CNBC + Acorns survey, only 15% of parents said they spoke with their children more than once a week about household finances, 13% said once a week, and 16% said once a month. Some 24% talk to their children about finances less often, and 31% never do.
Personal finance knowledge in many societies has traditionally spread inside families and communities, for better or for worse. While we are today living in an age of informational abundance, it can be challenging to distinguish the quality of the information and how to apply it to our lives.
10. The proportion of U.S. high school students required to take a personal finance course is small but growing
There is, however, a blip of optimism in the personal finance education field. According to Visual Capitalist, more and more U.S. states are introducing mandatory personal finance courses for high school students. While this number is fairly low (22.7% of HS students in 2022), it does show a positive trajectory.
Separate research has found that implementing a state mandate for personal finance education led to improved credit scores and reduced delinquency rates. There is also substantial support (a whopping 88% of surveyed adults) for personal finance education mandates, with most respondents wishing they had also been required to take a personal finance course.
Financial education must be higher on the governmental agenda list to have citizens better equipped to manage their finances.
Net Worth Statistics
11. The average net worth in the U.S. is $748,800, but the median is significantly lower at $121,700
Probably the best measure of one’s financial wealth is net worth (all the assets minus the liabilities). According to the most recent Federal Reserve Survey of Consumer Finance (SCF) in 2019, the average net worth is $748,800, up a modest 2% from 2016.
However, the median (middle value) is a much more modest sum of $121,700, up 17.6 % from 2016. This means that high-net-worth individuals are significantly raising the average, making it unrepresentative of the wider population.
12. Education level is the most important factor in determining the average American’s net worth
It is an understatement to say that education plays a very large role in determining the average (median) net worth of U.S. adults. The differences are startling, according to the same SCF survey. Americans with a high school diploma or some college have at least 3-4 times higher net worth than Americans without a high school degree. Having a college degree raises this number even further by a factor of 3.
However, not everything looks perfect in the financial world of college-graduated Americans, with 29.1% of them having student loans with an average balance of $55,880. Furthermore, 37% of borrowers with outstanding student loans who left before completing an associate degree are behind on payments.
13. The average net worth rises significantly with age (until the 75+ age group)
It is not a surprise that according to the same SCF survey, the average net worth rises significantly with age. After all, more time means more total income and more time for the compound interest to do its magic.
Young Americans up to 35 years of age have only $13,900 to their name, with that number rising quickly through the mid-life age and plateauing just after the usual retirement (age 65-74) at over a quarter of a million dollars. However, there is a decline in the 75+ age group, probably due to lower income, inadequate pension, higher healthcare costs, and various other factors.
14. There are almost 25 million millionaires in the U.S. (40% of the global millionaires)
According to the Credit Suisse 2022 Global Wealth Report, there are almost 25 million millionaires in the U.S. alone, making up nearly 40% of all the USD millionaires worldwide. China is a distant second with 10% (over 6 million) of USD millionaires.
It is important to note the influence of inflation in this regard – it surely doesn’t feel the same being a millionaire some decades ago and today. Also, for many of the millionaires on the lower end of this spectrum, the primary source of their wealth is tied to their residence.
15. Single men have a higher net worth than single women, but both have significantly lower combined net worth than couples
The aforementioned SCF survey brings to light some interesting statistics about the net worth of single men and women, and couples.
Namely, single women under the age of 35 have only around 13% of the median net worth compared to their single male counterparts ($1,310 vs. $10,110), and women aged 35 to 54 have just under 35% ($13,730 vs. $39,260) of the median net worth of single men that age.
This huge gap narrows substantially until the ages of 65+, where single women have 90% of the median net worth of single men.
They are both dwarfed by married couples with at least twice as high a net worth through all age groups as single men and women combined.
While it is always better to focus on the personal finance factors we can control, such as budgeting, saving, or debt management, some factors are completely outside our control.
The elephant in the room is inflation, which has been at its highest point in most of the world for the past couple of years since the 1970s. However, there are also some positive trends in late 2022 and early 2023.
16. Inflation is slowing down in 2023, especially in the U.S.
According to the data we gathered from tradingeconomics.com for April/May of 2023, the yearly inflation in the U.K. was 8.7%, in the EU 8.1%, and in the U.S. 4.9%. All of these numbers are significantly lower than just a year ago.
That doesn’t mean that the heightened inflation is not here anymore, but it is clearly slowing down, giving us all a reason for optimism. Many have argued that the U.S. FED’s quick and determined response in raising the interest rates has produced better and faster results than the more moderate approach of the U.K. and the EU.
17. Still, 83% of American adults cite inflation as a source of stress
According to a survey from the American Psychological Association, the vast majority (83%) of American adults consider inflation as a source of stress, significantly above even the general economy (69%) and money problems in general (66%).
We can probably expect this number to go down further if inflation continues to lower itself closer to its long-term historical average.
Real Estate Statistics
18. More Americans own their home on average than EU or U.K. citizens
Nearly 70% of Americans own their home, compared to about 66% of the EU and 63% of the U.K. residents, respectively (according to Wikipedia). Owning your real estate has been one of the cornerstones of the American dream. Perhaps this is why Americans tend to own their home in a more significant proportion (on average) than their EU or U.K. counterparts.
However, it needs to be said that there are substantial variations inside the EU, with many of the southern and eastern European countries tending to own real estate in greater proportion than their western and northern European counterparts.
19. Real estate prices have tripled in the US since 2000
According to the S&P/Case-Shiller U.S. National Home Price Index, home prices in the U.S. have tripled since 2000. Coupled with rising interest rates, this has made housing much less affordable for the average American. The silver lining here is that it seems that this growth is slowly tapering off, and not only in the U.S.
20. House prices growth in the EU significantly slowed down in 2022
A statistic we gathered from Eurostat shows that the housing market in the EU has significantly cooled down in 2022 compared to 2021. The yearly growth was at 3.6% in the 4th quarter of 2021, significantly lower than the 10.2% in the same period a year before.
This is also one of the signs of inflation slowing down and markets returning closer to their historical averages.
21. The U.S. is significantly ahead of both the U.K. and the EU in average income adjusted by the cost of living (GDP by PPP)
According to Wikipedia and IMF estimates, the U.S. is significantly ahead in average income adjusted by the cost of living (GDP by PPP) compared to the U.K. and the EU. However, it is again important to note the wide variations between individual EU countries. For example, Ireland is topping this global list with almost triple the EU average, while some countries are at less than half of the EU average.
22. The U.S. is showing a growing trend of inequality regarding income
According to Visual Capitalist, more than half of American households earn less than $75,000/year, and nearly 4 out of 10 are low-income households earning less than $50,000.
The middle class in America, in general, has shrunk significantly in the past 50 years, going from 61% of adults being middle-income in 1971 to 50% in 2021.
However, the median income for those considered middle class has jumped by 50% over the last five decades. This income growth has been 45% for low-income and 69% for high-income households (all inflation-adjusted).
It is interesting to see where the personal finance trends and statistics point to. There were clearly a lot of ups and downs in this area in recent years for the average citizen.
However, if we step back and look at the bigger picture, we can clearly see that we are mostly (on average) better off financially than just a couple of decades ago. The world’s “financial pie” has been increasing rapidly ever since the Industrial Revolution and has even accelerated in recent decades with the invention of new technologies like the internet.
Nevertheless, future growth and equal distribution of wealth and income are not guaranteed by any means. The first step each of us can take is to work on our financial education and improve our behaviors.
Working on raising one’s income, budgeting, retirement planning, debt management, and investing go a long way in improving one’s finances.