Scary Finance Stats You Can Change, Even With No Money

Sure, the scary finance stats lists usually revolve around debt: credit card debt, student loan debt, etc. But what about some other scary finance stats that anyone can fix today, even if they are struggling with money?

The first of the scary finance stats that anyone can fix, with zero money down, is to simply write up your budget! An estimated range of only 25-32% of people plan out their monthly budgets (1,2). Whether it be using a budgeting app or simply using your own spreadsheet to track and plan your spending, you can try to figure out a plan that fits you right away. The usual standard recommended is the 50/30/20 plan (3). Basically, this means that you should allocate 50% of your take home income to needs, 30% for wants, and 20% for investments and debt repayment.

Now what are these categories? For needs, this should be for items such as rent, groceries, utilities, transportation, etc. The wants category can be anything from travel to buying your coffee to anything else you love to do or spend money on, that isn’t something you need to survive or to work. And the most important one? Trying your best to allocate money to investments and paying off debts, especially paying off the high interest debts ASAP! But here’s the thing: a budgeting plan only works if it is something you can stick to. So maybe a friend of yours if going with a much more hardcore FIRE (financial independence retire early) type budget. This allows them to invest 50% of their take home income. Good for them! But they may have an entirely different financial situation than yourself. For example, they could be living at home with their parents (highly recommend if you’re able to). This might completely remove their rent (and maybe even their grocery expenses), which is the largest expense for most of us! Or you could know someone with several kids making a similar salary to yourself. Their needs category is likely much higher, due to having more mouths to feed, child care costs, etc.

So with the idea that no one has the exact same situation, you need to create a budget that fits your current life (may be a good idea to talk to a financial advisor or planner as well to help you get started). Start by simply writing down all your monthly expenses. If you’re using a spreadsheet, you can label each as need or want, and then filter them. Next, add each of those categories up and calculate how much of your take home income is going to each. Now that you know what’s going where, you can get started on a budget. First category is to figure out how much you need to go to your needs. This likely is a number that would be difficult to change, unless you are paying a high rent and can find somewhere cheaper or are paying a high car payment and want to sell the car for a cheaper one. You can also try to watch your grocery bill a little closer, and challenge yourself to stick to your meal plan a bit better. Now, like I said earlier, everyone’s needs category will be the same. If you’re below 50%, congrats! Hopefully you will be able to allocate more towards investments and debt! If you’re above 50% and you aren’t able to bring it down no matter what? That’s okay! You may just need to decrease your wants category a little bit in order to try to keep the investments/debts category at 20%. After figuring out the needs category, the wants category is where you can get creative. If you really want to be as financially savvy as possible, limiting the wants category as much as possible and putting all available funds towards investments would be one option. However, this often isn’t sustainable, and may cause you to burn out on your budget. So make sure you enjoy life if you’re able to! But again, try your hardest to still leave 20% for investing for the future and paying off any current debts. It does sound counterintuitive, but that’s what a budget is for: to balance living today with having a strong financial future.

Now, with the idea of investing for the future, here’s the second of the scary financial stats: 37% of people have not done any retirement planning! With only 23% having a written plan for retirement, and while 40% have done some planning but don’t have a formal plan (4). That’s a little freaky. We’ve all seen or heard the stories of older people almost dying working on the Walmart floor, and I don’t want that to be you! It’s a horrible situation, with people dealing with a wide range of surprise expenses in retirement, such as healthcare, their children, assisted living, etc. But this is what the 20% from our first of the scary finance stats is for! The unknown future! Additionally, this is where having a financial advisor and planner could really help. They can help you create a plan for how much you’ll need to retire, advise on where to put your money if you want to have passive income, etc. Simply having a plan in place can help relieve stress and get a better idea of what you want out of life. And even better? You can start to have an idea of when you’ll be able to retire!

But in order to be able to retire with a strong, secure future, you need to have solid foundations! This is where the third of the scary finance stats comes in. While this statistic is coming from 2015 and may be a little bit better, it is relevant to me considering it is when I was a teen. Only 1 in 5 teens have a basic foundation to build on for financial literacy… (5) That’s crazy! Sure, we learn trigonometry, biology, physics, etc. in high school, and these are relevant for many careers (being an engineer I use these daily), but what about financial education? We always say that the younger you start investing, the better off you are, but how can kids start if they don’t learn how?! Thankfully some states are starting to implement financial education. And many of us have parents who teach and instill strong financial values. But what about the other 80% of kids? Finances may be boring, but they are an essential part of life. The fact that kids are left to learn on their own may be the most horrifying of the scary finance stats, as it may be a leading contributor to why the other two of the scary finance stats even exist.

Again, with all the scary finance stats out there, I hope providing these three that anyone can fix with no money can help you to adjust and improve your financial life and goals. Making sure to be on the right side of these statistics could help you lead a more knowledgeable, less stressful life by having a better understanding of your finances and plans for the future.