Recent economic indicators have signaled a rosy picture – the US unemployment rate is down while corporate earnings are going up. But what does this mean for the US worker? A recent survey by Engine’s CARAVAN Overnight Omnibus supports this general upward trend, but some employees may still be struggling.
Overall, more than half of all American workers are ‘living paycheck to paycheck’ (52%), with Gen X being particularly compressed (58%) as they become increasingly responsible for kids and aging parents. It is perhaps no surprise that Gen Xers are referred to as the forgotten generation as they continue to struggle with the demands of children and parents in a near constant continuum. On the other end of the spectrem, only 38% of Baby Boomers share this sentiment.
In fact, a recent survey from MetLife (in partnership with Engine) revealed that Gen X (59%) are the least confident generation when it comes to finances – Millennials (67%) and Baby Boomers (65%).
For Gen X success may be found in personalized solutions and planning to meet their goals. Recent industry insights reveal that Gen X may have a decent balance sheet but assets are in their house and 401K. They need help with cash flow planning – that’s the only way they can develop investable assets. They need more advice than the multi-millionaire with a portfolio.
Where Does It Go?
Seeing that financial struggles continue to exist, leads to the question… where exactly does it all go?
Most of our paychecks go to housing (29%) followed by other living expenses (13% bills, 17% food/clothes/entertainment/other discretionary purchases). After debt repayment (e.g., credit cards, car payments, student loans – 15%) and insurance (10%), there’s not a lot left for saving (17%).
American workers are currently splitting the amount their saving almost equally between general savings (9%) and retirement savings (8%).
It is perhaps no surprise that nearly all of one’s monthly income goes toward housing expenses – but this number becomes even greater for lower income consumers and those in more expensive urban areas. The US Center on Budget and Policy Priorities notes that more than 11 million renter households, most with incomes below the poverty line, pay more than half their income for housing. This means that these families are often shifting other basic needs, such as clothing, to pay their rent.
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Getting to a place where you feel in control of your finances can be challenging and ever-changing.
Workers today say it is mostly about four things…
- 92% Being able to pay all of your bills on time, each month
- 85% Being able to pay down debt (e.g., mortgage, student loans, credit cards)
- 81% Being able to save for a big expense/purchase (e.g., home, car, college, travel)
- 80% Being able to save for retirement
…but this can vary depending on your personal situation and financial goals.
And based on one’s generation there is a shift in priorities as well. Millennials appear much more concerned about the needs of today and ability to pay bills on time each month. This is of course important across the board but as one ages, the ability to save for retirement and big purchases becomes more important since the number of working years gets shorter.
Now Is The Time!
April is Financial Literacy month, so it’s a great time to take a fresh look at your finances and figure out what will make you feel more in control and confident. There is an endless amount of financial wellness solutions out there and the U.S. government has even supported its dedication to financial literacy through the MyMoney.Gov page which is positioned as a “one stop shop” for education and budgeting resources for all ages.
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