American Family Money Status

Jun 15, 2012 by

While browsing Statistic Brain, I came across this table of data:

 

Financial statistics for the average American family

Verified by Statistic Brain 15 March 2012. Sources: Federal Reserve, Census Bureau, IRS

Paints an alarming picture, no? One must be careful drawing conclusions from averages because they can be skewed by relatively few, but extreme, outliers. Still, I’m nervous. Are Americans collectively really as unprepared for financial emergencies, big unexpected expenses, and retirement as these figures imply? If the answer is “yes,” then what are the short and long-term implications of this state of things?

Family Net Worth Dropped 39% Over Three Years!

These data are consistent with a Federal Reserve report released this week that said American families’ net worth plunged 39% from 2007 to 2010, due largely to the housing crash (though a 7.7% drop in median income surely played a role too). Median family net worth dropped from $126,400 in 2007 to $77,300 in 2010. Now—and in some cases due to the use of bubbled home values as a cash-out equity ATM machines (gleefully enabled by banks)—many homeowners gasp for financial breath from a desperate spot deep underwater on their mortgage.

What’s the Most Startling Statistic?

That 24% of workers decided in the past year to postpone retirement I think says it all. With too little saved, a crushed home value, and post-meltdown layoff damage control still underway, continued paid employment is simply a must. The lack of an emergency fund for 38% of families is also an attention-getter.

Average credit card debt of “only” $2,200 surprised me. I would have guessed at least double that amount. Maybe balances declined as credit availability tightened after 2008’s credit freeze-up.

How Do You Compare?

If you’re in the same predicament as the average American depicted above, you know you’ve got work to do. There’s nothing you can do to affect the overall trend in house values, but, if you’re still in your prime working years or younger, I think there’s good reason to believe your home will be worth a lot more when you retire than it is now.

The starting place for improving your family’s money situation is a firm foundation in the form of a budget. Set goals, be creative in boosting income, pay off debt, and live far below your means. The toughest part is getting started. Once you’re making progress, you’ll be inspired by your improving family finances to carry on and work toward your goals.

What Scares You the Most?

What do you find to be the most alarming of this scary set of statistics? And what scares you the most about your own set of financial challenges?

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