5 Troubling Money Statistics and How To Use Them as Motivation in 2022

In this Jan. 21, 2020 file photo, dollar bills have been dropped into a tip jar at a carwash in the Brooklyn borough of New York. (AP Photo/Mark Lennihan, File)

Money can make life stressful, especially if you don’t have enough. Many aspire to have a financially stable life, which requires us to work on our finances; however, it can still be a challenge to get the resources to accomplish that. In 2022, use these financial statistics to guide yourself to stability and set yourself up for success.

1. 54% of Americans Live Paycheck to Paycheck

According to a PYMNTS and LendingClub survey, 54% of Americans live paycheck to paycheck. In addition to that, 40% of people earning more than $100,000 per year said they lived paycheck to paycheck as well.

What Can You Do?

If you’re living paycheck to paycheck, try to get out of this situation as soon as you can. One way to do this is to create a budget that works for you. When you make a budget, you know where your money is going.

When you’ve identified where your money is going, it can be easier for you to cut spending and only spend money on something that holds value for you.

Another way that budgeting might help you is by saving money or having a buffer. Saving money as a buffer for when financial hardships are on their way is a great way to lower your stress around money.

This ease around money is invaluable and can come in handy when things break or significant maintenance needs to be done.

2. 61% of Americans Struggle To Pay for a $1,000 Emergency

Suppose you receive an unexpected $1,000 bill like a car repair or you need to fix your roof. Can’t afford it? You’re not the only one. According to Bankrate, most Americans (61%) can’t come up with a $1,000 fund in case of an emergency.

The statistic also includes families with an income of over $100,000 who don’t have enough money to come up with a $1,000 emergency.

What Can You Do?

Luckily, even a little goes a long way. According to the Urban Institute, a saving cushion from $250 to $750 can help you to avoid missing housing payments or eviction.

When you’re feeling financially safe, you can start to work on your emergency fund. Ideally, you would work towards three to six months of expenses. The emergency fund’s purpose is to reduce your need to take out debt when an emergency arises.

3. Only 24% of Millennials Have Basic Financial Literacy

From all the respondents in this study from the National Endowment for Financial Education, 69% consider themselves financially knowledgeable. Only 24% showed basic financial knowledge when tested, and 8% had a high financial understanding.

What Can You Do?

It’s crucial to learn from your money mistakes or lessons that your parents taught you. Another thing you can do is to develop yourself in financial activities regularly, by doing things like reading blog articles or watching videos on YouTube.

Your way of learning depends on what kind of learner you are. When you learn in these different ways, you will see your financial knowledge grow, and you will learn more about investing, saving more money, and making more money.

4. 21% of Americans Don’t Save Anything of Their Annual Income

21% of Americans don’t save anything of their annual income, according to CNBC. One in five people isn’t saving for retirement, financial emergencies, or other financial goals.

What Can You Do?

Let’s discuss three quick strategies to increase your savings without any significant life changes:

1. Start as soon as you can.

The sooner you start saving, the less money you’ll have to save. As you might know, the power of compound interest kicks in in that case.

2. Avoid impulse purchases.

Over the past year, Slickdeals found that people spent an average of $3,300 on impulse shopping. That is up 51% from the previous year.

Impulsive purchases can influence your budget and spending, and avoiding them can give you the extra savings you need to fund your emergency fund.

3. Automate your savings.

Pay yourself first and use investment vehicles like 401(K) or your regional pension regulations.

Automating your savings and using investment vehicles will make you save more without even realizing it. Especially when you pay your pension savings pre-tax: you won’t get it on your bank account, so you don’t notice it as much.

Even if you’re in a situation where paying yourself first can be challenging, like living on an irregular income, you can still budget.

5. 1 in 3 Americans Have Saved $0 for Retirement

Saving in general, and saving for retirement specifically, require specific attention. A Bankrate survey pointed out that 33% of Americans have nothing saved for retirement.

The survey found that 56% have less than $10,000 saved for retirement.

What Can You Do?

If you’re starting your career, start getting into the habit of saving early or working in a higher-income profession. Even when you start small, the general advice is to start sooner rather than later.

Saving or investing in your 401(K) and using the employer match can give you a good start. You don’t pay taxes on the money you contribute to these retirement accounts. According to the OECD, you will save an average of 22.4% when investing before taxes.