Decades of statistics have revealed that American’s are not as comfortable as they used to be. Financial gurus have made a fortune writing books and giving seminars on how to pull the bootstraps up of millions of American’s. The advice is helpful but usually sought for after catastrophe.
Let’s examine the typical American: they rent an apartment that eats up half or more of their monthly income, likely drowning in debt and doesn’t have a significant safety net. The American dream is built on the premise that anyone is capable of having a house, car, 2.5 kids and a comfortable lifestyle because at one point that was feasible. Baby boomers were able to live off one income, buy homes and retire with significant pensions.
There has been an obvious shift in the past 50 years. People are making more money but cannot afford more of the components that make up the American dream. The job market (outside of trades) requires higher education. Entry level jobs are asking for Bachelor’s degrees to do simple things like answer phones and make appointments. The hardship of being able to land a great job is the tip of the iceberg because students are carrying tremendous amounts of debt after graduation.
Student loan debt and minimal job prospects aren’t the only obstacles. Our capitalistic nature has greatly fueled our thirst for consumerism. The need to appear to be doing better, is not lost on the best of us. The stigma of being in the lower end of middle class, working class or poor is often enough too demoralizing; people are willing to drive themselves into debt to maintain a better image.
An article by The Yale Tribune, captured the sad financial state of America.
According to a 2017 GoBankingRates survey, 57 percent of Americans have less than $1,000 in their savings accounts. A shocking 39 percent have no savings at all.
The average American household carries $137,063 in debt, despite the median household income being just $59,039. The average credit card debt is $16,883, while the average auto loan debt is an astounding $29,539.
The obvious solution to this problem is to make more money or reduce spending to fit individual capabilities. Some situations can’t be cured by just putting down the credit card. Families are trying hard to keep the lights on, food on the table and a roof over their heads. Paychecks are barely able to cover the rising costs of rent, food and other daily necessities. The opportunities are not always there to produce more money, so they do what they can.
Financial literacy is the only way to combat the current state of our society. It is unlikely that rent prices will stabilize and college will suddenly become affordable. The average American needs to be well versed on how to maximize their money.
Life can be unpredictable and most people are one life event away from financial ruin. The proper steps to care for yourself financially should be taught at a young age, but it’s never too late to learn. Explore other education options such as trades or tuition reimbursement. Pick up your favorite guru’s book and try to stop the cycle. Learn about saving, debt management and money market accounts.
Rebuilding the stability in the average household is necessary to making the dream attainable again. Knowledge is the best way to empower society to make better financial choices.