Let’s face it, many people don’t know much about finances. At least not in-depth. That’s not to say people are unaware of what to do with money. In light of these unprecedented times, people face many obstacles regarding housing, finance, and work-related stress. Reluctantly, more people are trying to become responsible during the lockdown, so here are 25 shocking stats about money that could devastate a person’s financial future.
1- Who is financially literate in this world?
About 33% of adults worldwide are financially literate, and around 3.5 billion adults globally, most people within developing countries lack a basic understanding of financial management. The more a person comprehends the fundamentals of finance, the less likely they have debt.
2- Who was economically impacted by the pandemic:
Minority’ poverty rates increased in the United States as well as job loss, decreased work hours, businesses closed, and the inability to pay the mortgage on time. Koreans ranked among the highest at 68%, Filipinos 47%, and West Asians 42%, causing more uncertainty and hardship.
3- Paying bills in the midst of covid-19:
When the pandemic began, 64% of people in the United States reported that they were jobless and unable to pay bills. People were having a hard time making ends-meets, and many people were facing hardship due to the high pressure of unemployment.
4- Americans with no retirement:
The later you wait to prepare for retirement, the more difficult it can be to save. Yes, people are waiting until they’re 45. Financial statistics show 25% of adults do not have retirement. We all know it’s very understandable; no one is thinking about the long run in their 20s unless they are incredibly proactive and responsible. Most of us don’t think about the long run until we get around 30-40. Not all adults are financially stable and end up waiting too late in age to start saving for retirement.
5- Bad credit score:
A low credit score is nothing new; a simple number can impact your life in the most inconvenient ways. Whether it’s getting a mortgage or a decent car, a bad credit score brings down the value of your life. Stats from badcredit.org show that 11% of consumers have a credit score lower than 550.
6- Excellent salaries don’t equal knowledge in finance:
Americans making six figures a year still live paycheck-to-paycheck depending on what city they in and lifestyle they try to measure up to. It’s wild because if you make over 100k everything else should fall into place, bills paid on time, and savings accounts should be in order. But no!
7- Emergency fund:
Emergency funds are essential just in case life gets too crazy. But, surprisingly, only 47% of Americans have a rainy-day fund. The rest just wing it!
8- Healthcare in America:
Let’s look at this staggering numbers. In the United States, we spend 3.1 trillion dollars on healthcare, and it’s no surprise the healthcare industry has always been costly. It’s no mistake that America has one of the best. So Americans have mountains of debt in healthcare on top of everything else. In the beginning of 2020, 43.3% adults ages 19-64 did not have good health insurance– from commonwealthfund.org Poor health insurance means more bills and debt.
9- Millennials and finance:
I say anything that is known can be taught. We are the generation of innovation. However, I wholeheartedly blamed the school system. They teach children about percentages, find the mean, range, and average, and then boom! algebra (alphabetical math.) What do you expect? A generation of young adults for the first half of their lives don’t know much about finances completely oblivious to the way the work works. Only when they get a mountains debt do they start to change.
10-The percentage of Americans living paycheck to paycheck during a pandemic:
Studies have shown 63% of Americans are living paycheck-to-paycheck since the beginning of the lockdown. This hustle culture is an everyday reality for many people. Ultimately you end up working to live, never having any time to invest in yourself and enjoy life.
11- The growth of debt
Since 2000, American debt has grown 52%—cases of people filing for bankruptcy has increased. The only period where debt decreased was in 2005.
12- Insane credit Card debt:
Americans owe 900 billion in credit card debt and have about 3 trillion available credit. The average household holds 41% reoccurring—-examined in valuepigeon. Some of the most impoverished families have the highest debt—the type of debt impossible to escape.
13- Pretend bills don’t exist:
About 61% of people pay their bills on time. In contrast, 39% of people make late payments on their accounts. Most people try to implement a strategy when paying bills. 89% of consumers do. However, 5% of people never pay their bills on time or never pay at all; this isn’t good because, after a while, they start to pile up.
14- Not enough classes on financial literacy:
In high school, 70% of students had the option to take a single semester of Personal Finance in high school. According to the Council of economics and education. However, in my opinion, one semester isn’t enough; it should be a requirement throughout the four-years is because things can be forgotten, especially something that’s not practiced every day.
15- Saving is not that complicated:
69% of adults have savings in their bank account, which is usually less than $1000. $1,000 is not nearly enough; it can’t cover a costly emergency expense. Many people don’t understand that not having a savings account can derail your future.
16- Drowning in overdraft fees:
Since the Covid-19 pandemic, banks have been taking hits; they have been hitting customers with overdraft fees. Last year, overdraft fees increased by 14.39%–stated in badcredit.org. There is nothing worse than charging people who are already in vulnerable situations. When you have overdraft fees, it can potentially ruin your credit score.
17- Student debt statistics
American students owe 1.71 trillion dollars in student loan debt. During the pandemic 11.1% of student loan accounts were delinquent. In light of the recent pandemic things have been even worse because jobs families are losing their jobs. People can’t afford to pay for student debt and they’re just pushing it off. In addition, monthly student payments were placed on hold.
18 Holiday spending:
During the holiday season Americans spend even more than they do throughout the year. I get it. It’s exciting buying presents for people and seeing the smiles on their faces. Just being a part of the season and the celebration, right? Well, last year 40% of consumers actually spent less. I’m guessing it’s because most people didn’t feel the holiday cheer, since we’re in a global pandemic and money is tight and many people are facing financial hardship.
19- Alarming Hospital debt stats
72 million people currently owe a substantial amount of money in medical bills. Various medical insurance types cover an array of medical insurance that requires a co-payment. Some people don’t have medical insurance, so they get a bill when they go into the hospital. That’s a lot of debt continuously piling up.
20- At the risk of eviction:
Many Americans with numbers ranging from 30 to 40 million could be at risk of being evicted. Because of the covid-19 pandemic, many people cannot pay their bills. People also face renter cost burden: where they do not make enough to pay their rent. If this keeps happening, 29.43% of people could be homeless by the end of the year. People of color, specifically black and Latinos, are more likely to be renters and more likely to face eviction.
21- No income:
According to the Census Bureau, 12.3% of Americans do not even have an annual income. They don’t even make money, at least what the government can track. So if you can’t make money, you can’t put away money to save, you can’t invest your money, and you can’t grow.
22- Not understanding finance:
When you don’t understand finance and the way money works and how to grow money for generations to come, then you end up failing over and over again. In the United States, 24% of Americans only possess a basic understanding of finance. They don’t know the intricacies of it, not enough to improve their situation thoroughly.
23- The miss-use of home equity:
Some Americans will use their home to pay off other expenses. Approximately 4 out of 10 people use loans that were supposed to renovate their home for expenses. Tax write-offs cannot be applied to a home equity loan if you’re doing something else. Homeowners do not have hidden funds to pay off emergencies, and that is why they take out home equity loans. But it puts you in a giant hole.
24- Are finance stressing you:
With the increasing economic changes and rising financial concerns, workplace stress has skyrocketed. 70% of Americans face pressure at work, whether it is because of deadlines or personal finances. Stress can cause employees to underperform jobs costing the company large amounts of money. The pandemic has caused growing uncertainty in employees. Companies have cut back on hours and push a heavy workload on their employees, making them even more stressed out. On top of that people are more concerned about their family and health. Stress has also affected people’s sleeping conditions and worsened their health.
25- Gender gaps when saving money:
In August, 50% of men saved money compared to 30% of women– from badcredit.org. Usually, men are not impulsive shoppers, and some are just more practical with money. Studies have shown that women tend to be more stressed out about finances than men.
Conclusion
Ultimately, if anything comes out of this pandemic, more people will understand that finances are a lifeline; they are critical and can have devastating effects on your quality of life. Some may find it intimidating to learn about finances and implement those skills into everyday life for the better. When you understand your limitations, you’ll become more responsible. Remember, living within your means doesn’t mean you’re incapable of having nice things. Anyone could break the bank to have it, but not many people possess the mental fortitude to face their mistakes and improve for the better. Now let’s do things the correct way!
