When it comes to our finances, most of us operate under the assumption that we could always use better budgeting skills.
And while that may be true, it’s time for us to reveal some interesting statistics about budgeting in the U.S.
Read on for more insights into budgeting and how you can improve your financial standing!
What is the #1 Rule of Budgeting?
The #1 rule of budgeting is to make sure that your spending does not exceed your income. This may seem like a simple rule to follow, but it can be surprisingly difficult.
In fact, very few Americans have a budget, and even less stick to it.
Financial statistics reveal that the majority of Americans are living paycheck to paycheck.
With all of your financial obligations, it can be easy to overspend. That is why it is so important to stick to a budget.
When you know how much money you have coming in and going out each month, you are more likely to stay within your means.
So if you want to get your finances on track, make sure you follow the #1 rule of budgeting – and take a closer look at the personal finance statistics and budgeting statistics below!
Budgeting Statistics- Highlights
- Only about 25% of all people take the time to budget and lay out their finances.
- About 59% of people identify as savers and care about how much they spend compared to their annual income, a good indicator of basic financial literacy.
- 58% of people say they would set up a budget if they knew how to do it correctly, highlighting the importance of financial literacy.
- 59% of adults live paycheck to paycheck.
- 29% of American adults don’t save any of their income at all – not in terms of retirement savings, an emergency fund, or anything else.
Only about 25% of all people take the time to budget and lay out their finances
(Source: Schwab 2019 Modern Wealth Index)
It’s no secret that budgeting can be a tedious and time-consuming task. Nevertheless, it’s a crucial step in taking control of your finances.
This means that the majority of people are living paycheck to paycheck with no clear understanding of where their money is going. Budgeting can help you to find ways to save money and make your money work for you.
It can also help you to avoid unnecessary debt and reduce stress levels associated with financial insecurity. If you’re not currently budgeting, now is the time to start. Taking control of your finances can be empowering and liberating, and it all starts with budgeting.
58% of people say they would set up a budget if they knew how to do it correctly, highlighting the importance of financial literacy
(Source: Clutch)
A budget is a vital tool for anyone looking to get their finances in order. Unfortunately, a lack of budgeting knowledge can make it difficult to create an effective budget.
This highlights the importance of financial literacy. Without budgeting education, many people are left guessing when it comes to setting up their budget. This can lead to overspending and debt problems down the road.
Fortunately, there are many resources available to help people learn about budgeting and personal finance. By becoming more financially literate, people can take control of their finances and make sound budgeting decisions.
About 59% of people identify as savers and care about how much they spend compared to their annual income, a good indicator of basic financial literacy
(Source: The Penny Hoarder)
This is a good indicator of basic financial literacy. The study also found that budgeting and personal finance are important financial skills. Budgeting statistics show that people who budget are more likely to save money and be financially stable.
Personal finance statistics show that people who manage their finances well are more likely to be financially successful.
Financial statistics show that people who are financially literate are more likely to be financially stable and successful.
Reviewing your annual budget every time 25% of the year has gone by and reworking it will allow you to improve your personal finance stats and make better decisions to improve your financial health
(Source: Small Biz Trends)
On first glance, this quote appears to simply be stating the importance of regularly reviewing one’s budget. However, upon closer examination, there is a lot more wisdom packed into this statement.
By waiting until 25% of the year has passed before reviewing your budget, you are effectively giving yourself a “mid-year check-up.” This allows you to make any necessary adjustments to ensure that you are on track to reach your financial goals.
It also provides an opportunity to reflect on your spending habits and make changes that will improve your financial health.
For example, if you find that you are struggling to make mortgage payments or save money, then this is a clear sign that something needs to be done. By reworking your budget at the halfway point, you can put yourself on a path to financial success.
Young adults who receive financial literacy training are less likely to have credit card debt and are more likely to be knowledgeable about how to avoid student loan debt, along with other personal finance statistics
(Source: Council for Economic Education)
It’s no secret that many young adults struggle with personal finances.
Of course, credit card debt is only one type of financial burden that young adults face. Student loan debt is another major concern, with the average graduate owing nearly $30,000.
Given the large amount of debt that many young adults are carrying, it’s not surprising that financial education is increasingly seen as a necessity. After all, if people don’t know how to manage their money, they’re more likely to find themselves in a difficult situation.
Fortunately, there is evidence that financial literacy training can make a difference. The same study that found high levels of credit card debt among millennials also found that those who had received financial education were less likely to carry credit card debt and more likely to be knowledgeable about how to avoid student loan debt.
In other words, financial literacy training can help young adults to become better equipped to manage their money and avoid the crippling effects of debt.
West Virginia ranks as the least financially literate state while Michigan residents have the highest level of personal finance knowledge
(Source: Mint)
You can attribute these personal finance statistics to a medley of factors, including the different levels of financial education available in each state. In West Virginia, for example, only 26 percent of high school students are required to take a personal finance course before graduation.
In Michigan, by contrast, 80 percent of high school students must complete a personal finance course. The study’s authors also point to differences in unemployment and poverty rates as contributing factors to the gap in financial literacy between the two states.
With less money to work with and fewer resources available, residents of West Virginia are more likely to struggle with basic financial concepts. The study’s findings underscore the importance of financial education in helping people to build a strong foundation for their future.
25% of parents report never talking to their kids about personal finance or budgeting, who rely on their parents as a key source of financial education
(Source: Guidant)
This is concerning because it means that these children are not getting the information and tools they need to make sound financial decisions when they become adults. The study also found that parents are the key source of financial education for their children.
This is understandable, as parents are the most influential people in their children’s lives. However, it is important for schools to also provide financial education so that all children can develop the skills they need to manage their money wisely.
By teaching children about personal finance and budgeting, we can help them to build a foundation for a bright financial future.
Nearly 20% of workers earning a salary higher than $100,000 are still living paycheck to paycheck and tend to have a high level of consumer debt
(Source: Willis Tower Watson)
The quote highlights a surprising statistic: even workers earning a high salary are not necessarily financially secure. There are a number of factors that can contribute to this situation.
For one, the cost of living in many parts of the country is high, and workers may find that their salaries are not enough to cover basic expenses. Additionally, some workers may have large amounts of consumer debt, which can make it difficult to make ends meet.
Finally, workers may simply be mismanaging their finances, resulting in a situation where they are constantly struggling to make ends meet. Whatever the cause, the quote serves as a reminder that financial security is not always determined by salary.
64% of Americans say they would pay for unexpected $400 expenses with a credit card, cash, or savings
(Source: Federal Reserve)
This quote is significant because it highlights the importance of having emergency funds available.
Unexpected expenses can pop up at any time, and it’s important to be prepared for them. This quote also underscores the importance of using credit cards responsibly. If you only use your credit card for emergency expenses and always pay off your balance in full, you can avoid paying interest and fees.
Finally, this quote highlights the importance of saving money. Having a cushion of savings can help you cover unexpected expenses without going into debt.
59% of adults live paycheck to paycheck
(Source: Schwab)
Given these findings, it’s not surprising that so many people are living paycheck to paycheck. With such high levels of debt, many people simply don’t have any extra money to save.
What’s more, with the cost of living continuing to rise, it can be difficult to keep up with expenses without going into debt. As a result, it’s not surprising that so many American adults are struggling to make ends meet.
29% of American adults don’t save any of their income at all – not in terms of retirement savings, an emergency fund, or anything else
(Source: CreditDonkey)
According to a recent survey, nearly one-third of American adults do not save any of their income. This means that they are not setting aside money for retirement, an emergency fund, or any other purpose.
Whatever the reason, it is clear that a significant number of Americans are not saving for the future. This could have serious implications for the economy as a whole. If more people began saving, they would have more money to invest and spend, which could help to stimulate economic growth.
However, without savings, many people will struggle to make ends meet during retirement or in the event of a financial emergency. This could lead to increased reliance on government assistance or credit cards, which would further strain the economy.
Ultimately, whether or not to save is a personal decision. But it is clear that saving is important for both individuals and the economy as a whole.
American credit card debt has nearly doubled in the last ten years, growing from $72 billion to $143 billion
(Source: TransUnion)
There are a number of reasons why American credit card debt has nearly doubled in the last ten years. One reason is that the cost of living has increased faster than wages. This means that more and more people are relying on credit cards to make ends meet.
Another reason is that interest rates on credit cards have been rising. This means that people are paying more in interest, which can make it difficult to get out of debt.
Finally, many people use credit cards for convenience and do not always pay off the full balance each month. This can lead to a spiral of debt that becomes increasingly difficult to escape.
In the United States, the average American household with a credit card carries an average credit card debt of $8,398
(Source: Debt.org)
This debt can be difficult to repay, especially if unexpected expenses arise or income decreases. Additionally, interest rates on credit cards are often high, which can make the debt even more difficult to manage.
There are a variety of ways to reduce credit card debt, such as making a budget and sticking to it, negotiating with creditors for lower interest rates, and consolidating debt. However, it is important to be aware of the dangers of credit card debt and to take steps to avoid it.
54% of Americans don’t take the time to figure out monthly student loan payments before taking out student loan debt
(Source: GFLEC)
This can be a costly mistake, as it can lead to borrowers taking on more debt than they can afford to repay. Repayment plans that offer lower monthly payments may seem like a good option, but they can ultimately end up costing you more in interest charges over the life of the loan.
Before taking out any student loan debt, be sure to do your research and calculate how much you’ll need to budget for monthly loan payments. Otherwise, you could end up facing a large bill that you can’t afford to repay.
In 2018, the average household income in the United States was $63,179
(Source: U.S. Census)
Households are bringing in less money than they did in previous years, after adjusting for inflation. In addition, the cost of essential items like housing, healthcare, and childcare have all increased. As a result, many families are finding it difficult to keep up with their expenses.
66% of American millennials don’t feel on track when it comes to retirement savings, particularly due to the burden of mortgage payments, student loan debt, and high housing costs in general
(Source: TD Ameritrade)
This is a significant concern, as retirement savings are crucial for maintaining a comfortable lifestyle in one’s later years. However, there are steps that millennials can take to improve their retirement prospects. For example, they can start saving early, invest in a 401(k) or IRA, and plan for unexpected expenses. By taking these steps, millennials can increase their chances of having a comfortable retirement.
The average household borrowed $1,381 to pay for holiday expenses in 2020, with 89% of Americans not being able to pay off that credit card debt within a month
(Source: MagnifyMoney)
This cycle of holiday borrowing and debt can be difficult to break, but there are steps you can take to reduce your holiday expenses. Instead of using credit cards, consider using cash or a debit card. You can also set a budget for gifts and stick to it. By taking these steps, you can help reduce your holiday debt and enjoy a stress-free season.
Only 39% of Americans have enough cash to cover a $1,000 emergency
(Source: Bankrate)
This is a frightening statistic, especially in light of the current economic downturn. It’s clear that many people are living on the edge, and one unexpected expense could push them over the brink.
The good news is that there are ways to build up an emergency fund. Even if you can only save a little bit each month, it will eventually add up. And if you ever do find yourself in a financial bind, you’ll be glad you did.
Final Thoughts: Budgeting Statistics
While budgeting may seem like a daunting task, it is important to remember that you are not alone. A majority of people feel the same way when it comes to creating and sticking to a budget.
By using the financial statistics we’ve provided in this post, you can create a realistic budget that works for you and your family. Are you ready to get started?
