6 Personal Finance Trends That Should Worry All Americans

April is National Financial Literacy Month, which means it’s the perfect
time for Americans to review their money situation and brush up on their
financial education. Developing better money management skills makes it
more likely that individuals will reach their financial goals.
Unfortunately, nearly two-thirds of Americans (63
percent) can’t pass a basic financial literacy test.

To help Americans improve their financial lives, members of the American
Institute of CPAs’ (AICPA) National CPA Financial Literacy Commission
share the following tips. For members of the media, the AICPA has
experts ready to assist with stories on the below areas and any other
personal financial topic.

Credit Card Debt Rising
Stat:
As of December 2018, total U.S. consumer credit card debt is $870
billion, the highest total ever, according to the Federal
Reserve Bank of New York.
Tip: Use Credit Cards Cautiously
Quote:
“Credit cards allow people to make large purchases without carrying
large amounts of cash, track spending and even earn rewards. However,
when you find you’re unable to pay your balance off in full each month,
you’re paying interest charges. And if you’re unable to make the minimum
payment, it can result in fees, higher interest rates and a negative
impact on your credit score. If you’re having trouble managing your
credit card debt, tools like a credit
card payoff calculator can help you map out a plan to pay down your
balances and get a fresh start so your credit cards can start working
for you.”

– Neal Stern, CPA member of the AICPA National CPA Financial Literacy
Commission

Retirement Saving Goals in Limbo
Stat:
Less than half of non-retired Americans (46 percent) are confident
they’ll reach their financial goals by retirement, according to an AICPA
survey.
Tip: It’s Never Too Early to Start Saving
Quote:
“A 401(k) can
be one of your best tools for building a secure retirement. They provide
two key advantages. First, the amount you put into your 401(k) account
lowers the taxable portion of your salary in the current year. This
means all contributions to your 401(k) grow tax free - you’ll only pay
tax when the money is withdrawn. Second, many employers provide matching
401(k) contributions. If your employer does this, try to at least
contribute the amount that gets you the maximum match; otherwise you’re
walking away from ‘free money.’ Even a small contribution each paycheck
can turn into a lot down the road. The AICPA’s 401(k)
savings calculator can show you what starting today can do to
support your retirement planning.”

– Michael Eisenberg, CPA/PFS member of the AICPA National CPA Financial
Literacy Commission.

Car Loan Delinquencies Increasing
Stat:
A record 7 million Americans are 3 months behind on their car
payments, even more than during the wake of the financial crisis,
according to the Federal
Reserve Bank of New York.
Tip: Plan Ahead & Read the Fine
Print
Quote: “When buying a car, it is important to
remember that, regardless of any attachment you may have to a brand or
model, you are incurring a significant financial obligation that you
will have to pay back over time. Before agreeing to any financing
arrangement, read the fine print to make sure you understand exactly
what you are getting into and make sure it fits into your overall
budget. Lastly, if there are viable public transportation options in
your local area, it might make sense to explore those as you evaluate
your transportation or automobile needs.”

– Dr. Sean Stein Smith, CPA member of the AICPA National CPA Financial
Literacy Commission

Fewer Americans Following a Budget
Post-Recession
Stat: The percent of Americans who
follow a monthly budget has declined since the recession (39 percent in
2018, compared to 58 percent in 2015), according to an AICPA
survey. Further, one in four Americans admit they do not pay all
their bills on time and nearly one in ten now have debts in collection,
according to the National
Foundation for Credit Counseling.
Tip: Do a Financial
Checkup
Quote: “Knowing how much you have coming in
compared to how much you’ve committed spend on things like rent, car
payment, insurance and other bills is key to better understanding how
much you actually have to spend on things like groceries, fun, and other
financial goals like paying off debt faster. Making sure you keep enough
set aside to at least pay the bills each month, then finding a way to
keep the rest of your spending within what’s left over will help you
avoid going into debt. Americans who need help managing a monthly budget
can use the AICPA’s budget
analysis calculator to run a report that will show them where their
money is going and identify areas for improvement.”

– Kelley Long, CPA/PFS member of the AICPA Consumer Financial Education
Advocates

Americans Lacking Emergency Preparedness
Stat:
If faced with an unexpected expense of $400, four in 10 adults would
either not be able to cover it or would cover it by selling something or
borrowing money, according to the U.S.
Federal Reserve.
Tip: Have A Backup Plan
Quote:
“What’s on your emergency
preparedness checklist? If you’re like most people, it includes
water, batteries, a first-aid kit and an emergency contact list. What
about the money you’ll need to deal with the situation? Disasters often
strike quickly and without warning. Plan ahead, by setting up a separate
account to build a ‘rainy day’ fund. Set a reasonable goal and start
small, setting aside a manageable portion of each paycheck. Watch the
fund grow, and when you reach your initial goal, you can decide whether
a larger amount would give you more peace of mind. Most importantly,
make a mental note of what the money can be used for (storm damage,
illness, unemployment, etc.), and don’t dip into the fund for any other
reason.”

– Margaret Poster, CPA member of the AICPA National CPA Financial
Literacy Commission

As Student Loan Payments Pile Up, Americans
Cutting Back
Stat: Total U.S. student loan debt
is $1.57
trillion. Eight in 10 U.S. adults with student loans (81 percent)
make financial or personal sacrifices to meet their monthly payment,
according to an AICPA
survey.
Tip: Do Your Homework
Quote:
“When it comes to taking
out a student loan, don't take out more than you can reasonably
expect to earn in your first year in the field of your major. Make sure
you first exhaust every available source of ‘free’ money before getting
any type of student loan. Meet with a financial advisor at school to
discuss available scholarships and also look for scholarships online.
Finally, make sure you are aware of the difference in pay-off options
between Federal and private student loans.”

– Tracie Miller-Nobles, CPA member of the AICPA National
CPA Financial Literacy Commission

The AICPA’s 360 Degrees of Financial Literacy Program is a nation-wide,
volunteer grass-roots effort to help Americans develop a better
understanding of money management and take control of their financial
lives. For the past fifteen years, the AICPA has been empowering people
to make better decisions with the tools and resources on the 360
Degrees of Financial Literacy Website. Financial Literacy is the
cause of the CPA profession and the 360 Degrees of Financial Literacy
program is the AICPA’s flagship Corporate Social Responsibility effort.
Our efforts are focused on financial education as a public service and
are completely free from all advertising, sales, and promotions. In
addition to financial calculators, articles and videos, the 360 website
features an ‘Ask the Money Doctors’ section where consumers can submit
their specific questions to be answered by a CPA financial planner.

Connect with 360 Degrees of Financial Literacy on Facebook,
Twitter
and Instagram
for tips, insights and motivation to keep your finances on track.

About the American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s largest member
association representing the CPA profession, with more than 431,000
members in 137 countries and territories, and a history of serving the
public interest since 1887. AICPA members represent many areas of
practice, including business and industry, public practice, government,
education and consulting. The AICPA sets ethical standards for its
members and U.S. auditing standards for private companies, nonprofit
organizations, federal, state and local governments. It develops and
grades the Uniform CPA Examination, offers specialized credentials,
builds the pipeline of future talent and drives professional competency
development to advance the vitality, relevance and quality of the
profession.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and
Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at www.aicpa.org/press.

About the Association of International Certified Professional
Accountants

The Association of International Certified Professional Accountants (the
Association) is the most influential body of professional accountants,
combining the strengths of the American Institute of CPAs (AICPA) and
The Chartered Institute of Management Accountants (CIMA) to power
opportunity, trust and prosperity for people, businesses and economies
worldwide. It represents 667,000 members and students across 184
counties and territories in public and management accounting and
advocates for the public interest and business sustainability on current
and emerging issues. With broad reach, rigor and resources, the
Association advances the reputation, employability and quality of CPAs,
CGMAs and accounting and finance professionals globally.

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