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A client walks into my office for a first meeting, puts down an envelope of assorted papers and takes a deep breath. I know exactly what is going to come next. I don't know yet what state her finances are in, of course. But what I do know is that she is already feeling embarrassed—embarrassed because she doesn't have enough money, embarrassed because she should have more, or just embarrassed that she has so much and still doesn't entirely understand what the heck she's doing with it. And don't let the "she" confuse you—all of this embarrassment around personal finances applies equally to men.
One of the most fascinating things about advising people on their finances is that you are often the only person who gets to hear what they are actually thinking about their financial situations. To me, their situations are almost never shocking—I've seen people with a lot more assets than you'd expect and plenty with a lot less than you'd think. What is shocking is how many people think their situations are unusual.
So here are a few bits of random information to make you feel better before the weekend—
Americans owe a total of about $8.17 trillion on their mortgages. Yours is just a drop in the bucket. And if you haven't bought a house, well, this is a good time to look at all those mortgage-bound borrowers and feel a little bit smug about your freedom.
Student loan debt stands at about $1.19 trillion, up about $78 billion from last year, which means that student loans are about as American as apple pie. In fact, more American than apple pie—how many Americans do you know who can make an apple pie?
The National Financial Educators Council tested over 8,000 people from 50 states on very basic financial literacy. The average score for adults 25 to 50 years old was a C-. Our oldest Americans (aged 50+) had the best grade with a resounding 75 out of 100. If you feel badly about the grade for your age group, at least you aren't in the 19 to 24 crowd. They got a cringe-inspiring 67% of their answers right. But then, again, mostly they're just trying to figure out the student loan apps right now.
The whole point of emergency savings is to spend it in emergencies. Also, emergencies—medical, employment, legal, etc...—happen all of the time.
Maybe that last point was not what you were expecting on a financial blog. But I find myself reminding people all too often that making ourselves (or anyone else) feel embarrassed about the ups and downs of life just doesn't make sense. And maybe, just maybe, if we talked about money more as a society, we might see that the person sitting next to us is trying to figure out all of the same stuff.
Stats are from the New York Federal Reserve's May Report on American consumer finance, available online for anyone looking for some laughs.
One of the best (free!) places to get good information on financial basics is the Practical Money Skills For Life video series—and my blog, of course.