6 Personal Finance Trends that Should Worry All Americans

April 2, 2019

  • Experts provide tips on paying down debt, saving for retirement and staying current on car payments
  • AICPA’s 360 Degrees of Financial Literacy Website provides tools and resources to empower Americans to make better financial decisions

NEW YORK (April 2, 2019) – April is National Financial Literacy Month, which means it’s the perfect time for Americans to review their money situation and brush up on their financial education. Developing better money management skills makes it more likely that individuals will reach their financial goals. Unfortunately, nearly two-thirds of Americans (63 percent) can’t pass a basic financial literacy test.

To help Americans improve their financial lives, members of the American Institute of CPAs’ (AICPA) National CPA Financial Literacy Commission share the following tips. For members of the media, the AICPA has experts ready to assist with stories on the below areas and any other personal financial topic.

Credit Card Debt Rising

Stat: As of December 2018, total U.S. consumer credit card debt is $870 billion, the highest total ever, according to the Federal Reserve Bank of New York.

Tip: Use Credit Cards Cautiously

Quote: “Credit cards allow people to make large purchases without carrying large amounts of cash, track spending and even earn rewards. However, when you find you’re unable to pay your balance off in full each month, you’re paying interest charges. And if you’re unable to make the minimum payment, it can result in fees, higher interest rates and a negative impact on your credit score. If you’re having trouble managing your credit card debt, tools like a credit card payoff calculator can help you map out a plan to pay down your balances and get a fresh start so your credit cards can start working for you.”
     – Neal Stern, CPA member of the AICPA National CPA Financial Literacy Commission

Retirement Saving Goals in Limbo

Stat: Less than half of non-retired Americans (46 percent) are confident they’ll reach their financial goals by retirement, according to an AICPA survey.

Tip: It’s Never Too Early to Start Saving

Quote: “A 401(k) can be one of your best tools for building a secure retirement. They provide two key advantages. First, the amount you put into your 401(k) account lowers the taxable portion of your salary in the current year. This means all contributions to your 401(k) grow tax free - you’ll only pay tax when the money is withdrawn. Second, many employers provide matching 401(k) contributions. If your employer does this, try to at least contribute the amount that gets you the maximum match; otherwise you’re walking away from ‘free money.’ Even a small contribution each paycheck can turn into a lot down the road. The AICPA’s 401(k) savings calculator can show you what starting today can do to support your retirement planning.”
     – Michael Eisenberg, CPA/PFS member of the AICPA National CPA Financial Literacy Commission.

Fewer Americans Following a Budget Post-Recession

Stat: The percent of Americans who follow a monthly budget has declined since the recession (39 percent in 2018, compared to 58 percent in 2015), according to an AICPA survey. Further, one in four Americans admit they do not pay all their bills on time and nearly one in ten now have debts in collection, according to the National Foundation for Credit Counseling.

Tip: Do a Financial Checkup

Quote: “Knowing how much you have coming in compared to how much you’ve committed spend on things like rent, car payment, insurance and other bills is key to better understanding how much you actually have to spend on things like groceries, fun, and other financial goals like paying off debt faster. Making sure you keep enough set aside to at least pay the bills each month, then finding a way to keep the rest of your spending within what’s left over will help you avoid going into debt. Americans who need help managing a monthly budget can use the AICPA’s budget analysis calculator to run a report that will show them where their money is going and identify areas for improvement.”
     – Kelley Long, CPA/PFS member of the AICPA Consumer Financial Education Advocates

Car Loan Delinquencies Increasing

Stat: A record 7 million Americans are 3 months behind on their car payments, even more than during the wake of the financial crisis, according to the Federal Reserve Bank of New York.

Tip: Plan Ahead & Read the Fine Print

Quote: “When buying a car, it is important to remember that, regardless of any attachment you may have to a brand or model, you are incurring a significant financial obligation that you will have to pay back over time. Before agreeing to any financing arrangement, read the fine print to make sure you understand exactly what you are getting into and make sure it fits into your overall budget. Lastly, if there are viable public transportation options in your local area, it might make sense to explore those as you evaluate your transportation or automobile needs.”
     – Dr. Sean Stein Smith, CPA member of the AICPA National CPA Financial Literacy Commission

Americans Lacking Emergency Preparedness

Stat: If faced with an unexpected expense of $400, four in 10 adults would either not be able to cover it or would cover it by selling something or borrowing money, according to the U.S. Federal Reserve.

Tip: Have A Backup Plan

Quote: “What’s on your emergency preparedness checklist? If you’re like most people, it includes water, batteries, a first-aid kit and an emergency contact list. What about the money you’ll need to deal with the situation? Disasters often strike quickly and without warning. Plan ahead, by setting up a separate account to build a ‘rainy day’ fund. Set a reasonable goal and start small, setting aside a manageable portion of each paycheck. Watch the fund grow, and when you reach your initial goal, you can decide whether a larger amount would give you more peace of mind. Most importantly, make a mental note of what the money can be used for (storm damage, illness, unemployment, etc.), and don’t dip into the fund for any other reason.”
     – Margaret Poster, CPA member of the AICPA National CPA Financial Literacy Commission

As Student Loan Payments Pile Up, Americans Cutting Back

Stat: Total U.S. student loan debt is $1.57 trillion. Eight in 10 U.S. adults with student loans (81 percent) make financial or personal sacrifices to meet their monthly payment, according to an AICPA survey.

Tip: Do Your Homework

Quote: “When it comes to taking out a student loan, don't take out more than you can reasonably expect to earn in your first year in the field of your major. Make sure you first exhaust every available source of ‘free’ money before getting any type of student loan. Meet with a financial advisor at school to discuss available scholarships and also look for scholarships online. Finally, make sure you are aware of the difference in pay-off options between Federal and private student loans.”
     – Tracie Miller-Nobles, CPA member of the AICPA National CPA Financial Literacy Commission

The AICPA’s 360 Degrees of Financial Literacy Program is a nation-wide, volunteer grass-roots effort to help Americans develop a better understanding of money management and take control of their financial lives. For the past fifteen years, the AICPA has been empowering people to make better decisions with the tools and resources on the 360 Degrees of Financial Literacy Website. Financial Literacy is the cause of the CPA profession and the 360 Degrees of Financial Literacy program is the AICPA’s flagship Corporate Social Responsibility effort. Our efforts are focused on financial education as a public service and are completely free from all advertising, sales, and promotions. In addition to financial calculators, articles and videos, the 360 website features an ‘Ask the Money Doctors’ section where consumers can submit their specific questions to be answered by a CPA financial planner.

Connect with 360 Degrees of Financial Literacy on Facebook, Twitter and Instagram for tips, insights and motivation to keep your finances on track.