Do daily finances give you daily heartburn? You aren't alone. According to a new survey by the Consumer Financial Protection Bureau (CFPB), 43% of Americans have trouble making ends meet. One-third of survey respondents reached the level of financial or material hardship during the past year, such as running out of food or being unable to make critical payments like rent or medical bills.
The CFPB's recent report on financial well-being in America distills information on income, employment, savings, financial experiences, and other individual and family characteristics into a single score reflecting financial well-being. On a scale from 0 to 100, the average financial well-being score for adults in the U.S. is 54, with a 35-point spread between the top 10% and bottom 10% of scores reflecting a fairly sharp drop-off point in financial confidence.
You would expect day-to-day financial struggles to correlate to a lower financial well-being score, and the CFPB data supports that premise. Between 93% and 96% of respondents with well-being scores of 40 or below have difficulty making ends meet, as compared to 2% - 7% of respondents with well-being scores of 61 or above.
A score between 41 and 60 represents the transition range between financial comfort and difficulty. 74% of respondents with scores from 41 to 50 had difficulty making ends meet, as compared to 32% of those with scores from 51 to 60.
The percentage of respondents that had difficulty making ends meet also correlates well to the percentage that experienced material hardship. For most well-being scores, the material hardship percentage was slightly lower than the percentage of those with difficulty making ends meet implying that at each well-being score level, some people are masters of just getting by without falling into crisis. Even so, the connection between day-to-day difficulties and the likelihood of falling into hardship is reasonably clear.
While the CFPB report provides useful information for policymakers and economists, it probably doesn't do much for you directly. If you have trouble making ends meet on a daily basis, you already know that financial and material hardship is a distinct possibility. You are more interested in what to do about it increasing your resources and making the best use of the resources that you already have.
How do you turn your financial situation around? To a certain extent, the issue is willpower but if you have no experience with financial planning or even basic budgeting, willpower will only get you so far. Financial understanding through education is critical to improvement.
Are you unable to set up a budget and stick to it? MoneyTips can help you get a start on the path to financial stability. Professional resources are also available through our community, but those resources are put to the best use if you start with a basic understanding.
Adam Carroll, Founder and Chief Education Officer of National Financial Educators, suggests applying the advice of the late business philosopher Jim Rohn. " [Rohn] was famous for saying that formal education will make you a living and self-education will make you a fortune ... you have to self-educate about credit, about debt, and about how to pay stuff off in rapid fashion."
Continuous education and discovery, along with real-world application of your lessons learned, is the key to making ends meet. In essence, more financial knowledge means better finances. That's the important underlying message of the CFPB report. No matter how good you think you are with a budget, there is always something more to be learned and applied to your daily life.
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Originally Posted at: https://www.moneytips.com/43-of-americans-have-trouble-making-ends-meet/597
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