How do you compare financially to Americans overall?

 Among U.S. families, 66% own their home, 58% own stocks, 54% have a retirement account, 45% have credit card debt and 35% have a car loan, according to the Fed's latest Survey of Consumer Finances.

Of course, no one is really average but the figures help you get an idea of where you stand. 

"Net worth. The typical (or “median”) net worth—meaning the value of all assets minus all debt for those American families halfway down the wealth spectrum—was $192,700 in 2022.  But the average (or “mean”) wealth, which measures America’s total net worth divided by all households, stood at $1,059,470. This is a classic example of skewness, with a small number of outliers—in this case, America’s wealthiest families—skewing the results higher."

Income. Skewness also shows up in pretax family income. As of the latest survey, the median (mid-point) household income was $70,260, while the average was twice as high, at $141,390. Houshold income is different from family income because households include singles whereas families are composed or two or more individuals which means the potential for two (or more) earners. 

Stocks. 58% of U.S. families were invested in the stock market, up from 48.9% nine years earlier. 

Real estate. 66% of families owned their primary residence, up from 63.7% six years earlier, but below the peak of 69% in 2004 (before the 2008 financial crisis).

Retirement accounts. 54.4% of families have a retirement account. Even in the age group where retirement accounts are most widespread—those ages 45 to 54—they’re held by just 62.2% of households. Those ages 65 to 74 had median retirement account balances of $200,000, enough to generate $670 in monthly income, assuming a 4% withdrawal rate.  

Credit cards.  When the data were collected... "credit card balances in inflation-adjusted terms are at their lowest levels since the 1990s. In 2022, 45.2% of families had card debt, down marginally from 2019, with a typical balance of $2,700 and an average balance of $6,120. Credit card debt is the most common form of debt, ahead of home loans, which 42.2% of families have, and car loans at 34.7%. Overall, 77.4% of families have some form of debt." However, the most recent data (mid-2023) show increases in the number of households with credit card debt and the amount of debt. 

Education loans. Roughly a fifth of families have student loans, with a typical balance of $24,500 and an average balance of $46,980.  

Thanks to Humble Dollar https://humbledollar.com/ blogger Jonathan Clements for this summary.  More details are available at: https://humbledollar.com/2023/10/by-the-numbers-2/?utm_source=mailpoet&utm_medium=email&utm_campaign=another-ses-test_7

How is the financial health of Americans changing over time?

If you are facing challenging financial stress due to the coronavirus, you are not alone. Even in 2019, before the virus, most Americans were not financially healthy according to research by the Financial Health Network https://finhealthnetwork.org/research/u-s-financial-health-pulse-2019-trends-report/?utm_source=nyt-paid-post&utm_medium=pulse-button&utm_campaign=nyt-paid-pulse
"In a year-over-year analysis, the second annual U.S. Financial Health Pulse report reveals that the majority of Americans are still not financially healthy, despite an economy that has continued to grow" based on 2019 data before the virus.

"The 2019 Trends Report presents findings from the second annual U.S. Financial Health Pulse consumer survey, including:
1. Only 29% of Americans are financially healthy, despite a booming economy.
2. Financial health disparities based on income, age, gender, and race have persisted since 2018.
3. Financial health changed for millions of Americans from 2018 to 2019, often dramatically.
4. People who had changes in their employment and physical health saw the largest year-over-year shifts in their financial health."
Keep in mind that these data and conclusions are from 2019 before coronavirus.

Taking the Nation's Financial Pulse in Uncertain Times

"Millions of Americans were struggling financially, even before the Covid-19 crisis." 

"The U.S. Financial Health Pulse shows that only 29 percent of Americans were financially healthy in 2019. Just over 70 percent of Americans were not financially healthy and may be unprepared for changes in their income, financial shocks or an economic downturn. These figures were roughly the same as 2018, but likely to change as the coronavirus outbreak takes its toll on the economy."

https://www.nytimes.com/paidpost/financial-health-network/taking-the-nations-financial-pulse.html?cpv_ap_id=50043239&sr_source=lift_morein&tbs_nyt=2020-March-nytnative_morein

"The U.S. Financial Health Pulse led by the Financial Health Network, is a landmark study designed to capture a more holistic picture of the financial health of Americans. The Pulse follows a large group of the same respondents year over year. It also combines survey data on spending, saving, borrowing and planning to devise a FinHealth Score™ that gives a detailed and realistic picture of how Americans are doing financially. Respondents fall into three categories: financially healthy, financially coping and financially vulnerable."

While the Financial Health Network is primarily geared to professionals in pubic policy, finance, and social networks, the knowledge that you are not alone if you are experiencing financial problems is key to taking action rather than blaming yourself. This blog is designed to for self-help and awareness of how to change one's behavior and resources for improving financial well-being.

A ONE-OF-A-KIND CONTINUING STUDY
SHOWS THAT MILLIONS OF PEOPLE
ARE LIVING ON THE EDGE

A ONE-OF-A-KIND CONTINUING STUDY
SHOWS THAT MILLIONS OF PEOPLE
ARE LIVING O 

A ONE-OF-A-KIND CONTINUING STUDY
SHOWS THAT MILLIONS OF PEOPLE
ARE LIVING ON THE EDGE

First step in budgets is to take a step back

"New Year, new budget" or "New Year, no budget" Which are you?
Yes, it's well past the new year (Happy Spring Equinox), but with so many people losing jobs, getting work hours cut, or having their financial life in a turmoil, maybe now is the time to revisit the "B" word. Actually, I much prefer the term "spending plan."
Are you the "hands on" must know where every dollar goes type or the automated no-budget type? 
You need to recognize which behaviors will pull/push you to take needed action. Preston Cherry, a CFP and Ph.D candidate at Texas Tech University studies personality types in relation to budgeting styles according to Wall Street Journal writer, Julia Carpenter.
Consider your own attitudes and habits (and that of your spouse/partner, which can be very different). Sometimes spouses hold very different views on money management and may benefit from consulting a financial therapist.
Focus on your financial goals. What do you want to achieve in the short and long run? If saving for a house down payment or paying off student loans (or both) is a priority. Focus on what strategies will get you there.
Don't be rigid (especially if someone else shares your financial life). Sometimes the best approach is to set up an automatic savings transfer from your checking account each month toward your goals and simply live on the rest without using credit cards.
There are lots of resources and tools available. Now might be the time to put a spending plan to work to reach your goals, whether planning for the future or how to survive a pay cut.

Financial Life Planner

HumbleDollar’s financial life planner’s goal is to guide you through 13 financial steps that’ll help you navigate the journey from your early adult years to retirement.

• Step 1: Prep for Success
• Step 2: Stockpile Cash
• Step 3: Doctor’s Orders
• Step 4: Aim to Retire
• Step 5: Shed Bad Debt
• Step 6: Protect Your Pay
• Step 7: Buy a House
• Step 8: Plan Your Estate
• Step 9: Make Projections
• Step 10: Educate the Kids
• Step 11: Revamp Insurance
• Step 12: Pay Off Debt
• Step 13: Quitting Time

https://humbledollar.com/money-guide/your-financial-plan/

What is your Financial Well Being Score?

Answer ten questions to measure your current financial well-being and see steps you can take to improve it.
See how your score compares to other U.S. adults from a national survey.

https://www.consumerfinance.gov/consumer-tools/financial-well-being/

Help you can find on this website:

Take control of day-to-day money management

• Track where your money goes. 
• Get a grip on debt.
• Repay student loans wisely.

 Get on track for your financial future

• Look toward home ownership.

• Create an action plan to meet your goals.

• Consider the right age for claiming Social Security.

• Build and maintain your credit record.    

  

Financial decisionmaking decline in older adults

 A recent study confirms that seniors become more confident in their ability to make financial decisions at the same time that their financial knowledge and decision making skills are declining... an ominous combination.

"Although episodic memory and financial literacy score decline at roughly the same rate after age 60, confidence in financial decision-making ability remains relatively unchanged with age. The percentage of overconfident respondents with high self-assessed ability and low objective literacy scores increases from about 10% in the 60s to higher than 30% among respondents over 85."
The likelihood of being overconfident with one’s financial knowledge increases with age. Each year of age after 60 increases the likelihood of having high confidence and low financial literacy scores by 7 %. Higher levels of education are associated with a much lower likelihood of overconfidence, as are being male and white."
"Recognition of diminished investment skills may increase demand for annuitization or the delegation of important financial decisions to a trusted advisor. However, our study finds that, in aggregate and within all financial decision-making domains, advanced age increases overconfidence in
financial decision-making abilities. The largest marginal effects are within the investment and insurance topic areas."
Similarly, "older drivers generally do not perceive a decline in their driving skills despite a predictable deterioration in sensory ability with advanced age."
Researchers Finke, Huston, and Howe: Old Age and the Decline in Financial Literacy, published in:
Management Science. Abstract available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1948627


Photo © Max Blain | Dreamstime Stock Photos

New Year, Fresh Start by Jonathan Clements

"WANT TO GET YOUR FINANCES headed in the right direction? Below are nine steps to take in 2017. With each step, I’ve included links to the relevant sections of HumbleDollar’s money guide." http://www.humbledollar.com/money-guide/main-menu/
Here is a summary of Jonathan Clements' "New Year-Fresh Start." Read the details at: http://www.humbledollar.com/2017/01/new-year-fresh-start/
1. Ask why.
2. Size up your opportunities.
3. Get started as an investor.
4. Buy a target date retirement fund.
5. Re-think your life insurance.
6. Build up your emergency fund- buy funding a Roth IRA. 
7. Revisit 2016's spending.
8. Plan your estate.
9. Talk to your family about your finances.

How Financially Fit are You?

Take the Financial Fitness Quiz at: http://www.schwabmoneywise.com/public/moneywise/calculators_tools
Select: "Financial Fitness Quiz" In addition to getting a numerical score (1-100) the site shows how you compare to others in your age group and provides specific recommendations for "next steps" with links to "learn more." Well worth the few minutes to answer 18 yes/no questions.

Solid Finances Webinars begin October 7, 2015

Jointly sponsored by South Dakota State University Extension, University of Idaho Extension and Montana State University Extension, the 2015-2016 Solid Finances schedule will consist of 18 sessions, with the first session on October 7^th.  The first 12 sessions will focus on issues for residents of all states. The final six sessions will focus on issues specific to participants from these three states.  Solid Finances will feature 10 different presenters sharing their expertise and answering your questions.

October 7: Saving Money & Finding Spending Leaks

Oct. 14 & 21: Home Buying and Emergency Savings. (2 sessions)

Oct. 28: Financial Records Organization: Preparing for Emergencies & Disasters.

Retirement Planning will be the focus of several sessions in December.  For a complete schedule visit: www.msuextension.org/solidfinances/schedule.html

 The webinars are free but you need to register: http://esconnectdb.msu.montana.edu:4503/content/connect/c1/7/en/events/event/shared/default_template/event_registration.html?sco-id=1272553

All webinars are recorded; past sessions are available at: www.msuextension.org/solidfinances/pastrecordings.html

Want higher investment returns? Get educated!

Financial Knowledge = Higher Investment Returns
“Financial knowledge is critical to one’s retirement security, finds a new study showing that 401(k) plan participants who scored higher on a test of their financial knowledge earned an additional 1.3 percentage points of investment returns annually on their retirement accounts.” 1.3% may not sound like much but compounded “over a 30-year working life, that higher rate of return would add 25 percent to total savings at retirement.” Are you financially savvy? Take the 5-item quiz by clicking here; answers appear at the end of this blog post. From the Squared Away blog: http://squaredawayblog.bc.edu/squared-away/financial-savvy-means-more-401k-returns/

Key Steps to Building Wealth

No, it’s not about taking more risk, buying the hottest new investment, spending lots of time on investment strategies, or working with an investing guru.  Researchers at Florida State University followed the behaviors of couples who earned similar incomes but built vastly different wealth. “The objective of this study was to identify differences in financial and investing practices of householders nearing retirement who differ markedly in terms of current household wealth but had similar opportunities to build household wealth during their lifetime.” They identified the following successful: “better communication between householders about the household’s finances; active garnering of financial information from employers and financial professionals; and attempts to forecast the wealth required for retirement and frequent monitoring of the household’s current financial status in relation to that goal. It is also likely to benefit from attempts to keep on the “right side” of interest; that is, to save and thus earn interest on those savings and to avoid debt and thus avoid paying interest and late fees on those debts.” http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p122355.pdf
Download the 2 page brochure "Are you Fiscally Fit? A resource to help you become and stay financially fit for life" at: http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p122356.pdf

Small Steps to Health and Wealth™ Workbook

The second edition of the 132-page Small Steps to Health and Wealth™ (SSHW) is now available. Download individual chapters of the workbook at http://njaes.rutgers.edu/sshw. The workbook consists of 25 SSHW behavior change strategies. Each strategy has one or more worksheets for users to personalize a change strategy to their situation.

Free: Instruction manual on saving and investing for retirement

“If You Can,” a concise, no-nonsense instruction manual on saving and investing for retirement, by William J. Bernstein, an investment adviser and author on financial subjects, is available free as an e-book, no strings attached, on his website. (It’s also available on Amazon.com for 99 cents). “If You Can” is a "snappy 7,000-word guide" to help you invest for retirement.  Learn about the "Five Horsemen of Personal Finance Apocalypse: failure to save, ignorance of financial theory, unawareness of financial history, dysfunctional psychology, and the rapacity of the investment industry."  Go directly to Bernstein's website: http://efficientfrontier.com/ef/0adhoc/2books.htm or read more at: http://www.nytimes.com/2014/05/04/your-money/a-path-to-retirement-for-those-far-from-it.html

Videos from the Financial Literacy Center

Here's some great videos we found from the Financial Literacy Center. Each of them covers a financial topic in a simple and easy to understand way. All videos are under 5 minutes

Click below to watch a video about employer matching program and the benefits they have for you!

Click below to learn about tax advantages that can save you money!

Click on the video below to learn more about why diversification is important

Click below to learn about compound interest: How it works and why it's important