It’s never too early to start thinking about managing your personal finances. Nowadays, financial literacy is more important than ever due to our ever-changing economic conditions. Whether you’re just starting out or you need to brush up on your existing knowledge, we’re here to provide you with the facts and statistics you need when it comes to personal finance. From budgeting to retirement planning, here’s a roundup of some of the most important facts and statistics related to personal finance.
Why Financial Literacy is Important
Before we dive into the nitty gritty of budgeting, credit, debt and retirement planning, let’s start with why financial literacy is an important thing. According to a survey by the FINRA Investor Education Foundation, 71% of American adults said they “did not feel knowledgeable” when it comes to personal finance.
Here are a few of the statistics that drive home the importance of financial literacy:
● A survey by the FINRA Investor Education Foundation found that over half of Americans had not saved enough for retirement and only 34% felt “very knowledgeable” about investing.
● Meanwhile, a 2017 survey by GoBankingRates found that 56% of Americans had less than $1,000 in their savings accounts and that nearly a third of Americans had no savings at all.
● Finally, a 2018 Stash survey found that only 33% of 18-to-36 year olds invested in the stock market — indicating a lack of understanding of the importance of investing and how to do it.
These statistics illustrate why financial education is so important. By understanding how to manage money properly, people can achieve financial freedom and improve their overall quality of life.
Budgeting
Budgeting is the cornerstone of personal finance. Budgeting involves tracking income, setting financial goals and figuring out where to allocate money. By budgeting, individuals can figure out how to pay down debt, save money and make sure they have enough money to cover their everyday expenses.
Here are a few budgeting statistics that demonstrate how important budgeting is to personal finance:
● 64% of people report they are budgeting to stay on track with their financial goals, according to an American Express survey.
● According to a Gallup poll, only 32% of people create a detailed monthly budget.
● Finally, a survey by NerdWallet found that 56% of Americans had overdrawn their checking accounts in the past year, likely due to the lack of a budget.
Credit
Having good credit is key to many aspects of personal finance. Credit can be used to purchase items on review, secure loans, negotiate better interest rates and even qualify for a job.
Here are a few credit-related statistics to demonstrate why credit is so important:
● A survey from LendingTree found that 64% of Americans have a credit score of 650 or higher, indicating a good credit standing.
● The same survey found that only 25% of Americans had an excellent credit score of 750 or higher, indicating there is room for improvement.
● Meanwhile, a survey by the National Foundation for Credit Counseling (NFCC) found that only 24% of Americans felt “very knowledgeable” about their credit score.
Debt
When it comes to personal finance, debt can be a double-edged sword. Debt can be used to purchase items such as a car or a house, but it can also become overwhelming if not managed properly.
Here are a few facts and statistics illustrating how debt affects Americans:
● A 2017 survey by ValuePenguin found that the average American has over $38,000 in debt — including $6,354 in credit card debt, $19,978 in mortgage debt, and $10,633 in student loans.
● A separate survey by TransUnion found that the average credit card debt for households in the United States is $5,700.
● A survey by FICO found that over 40% of Americans with a credit score of 720 or higher have carried a balance on their credit cards for over a year.
Retirement Planning
Retirement planning is a key aspect of personal finance. Planning for retirement involves saving enough money to cover expenses when one is no longer working.
Here are a few facts and statistics to demonstrate why retirement planning is important:
● A survey by the Social Security Administration found that 66% of Americans weren’t sure what age they should begin planning for their retirement.
● A separate survey by GoBankingRates found that 40% of Americans weren’t saving for retirement at all.
● Meanwhile, a 2017 Gallup survey found that only 18% of Americans have saved the recommended amount for retirement.
These are just a few of the facts and statistics when it comes to personal finance. From budgeting to retirement planning, it’s important to understand the basics of personal finance. Being financially savvy is key to ensuring financial security and achieving financial freedom.
