AICPA Highlights 6 Recent Personal Finance Trends

July 18, 2019

The American Institute of CPA’s (AICPA) recently published a list of personal finance trends that we should all be concerned about. These trends highlight the fact that almost 63 percent of Americans today are unable to pass a basic financial literacy test.

Here are the troubling trends, as well as some tips on how to avoid them:

  • Credit card debt is on the rise. As of the end of December, 2018, consumer credit card debt is $870 billion, the highest amount ever. Credit cards can be invaluable to consumers, helping to improve credit scores by using them responsibly. However, they also make it very easy to purchase big-ticket items that were previously out of reach. The rule of thumb is that if you can’t pay your credit card balance at the end of each month, you’re potentially in trouble, with high interest rates and over-limit fees. Even if you can’t pay your bill off in full each month, you should always pay more than the minimum amount due.
  • Lower confidence in financial security for retirement. An AICPA survey indicates that only 46 percent of Americans are confident that they will attain their financial goals prior to retiring. In order to ensure that your financial future is secure, start saving now. If your employer offers a 401(k), sign up today. If your employer has a match, you’re losing money if you don’t. If you’re self-employed, open an IRA. But do it today. Retirement sneaks up very, very fast.
  • Not following a budget. Only 39 percent of Americans currently follow a budget. Even more alarming, one in four Americans admit to not paying their bills on time, while one in ten have debts in collection. Creating even a basic budget allows you to see how much money you have coming in each month, how much you need to spend on things like a mortgage/rent, groceries, and other bills. If done right, it will also show you where you’re over-spending. Take a few minutes to see exactly where your money is going.
  • Late car payments. Car loan delinquencies are the highest they’ve ever been. In fact, more than 7 million Americans are at least three months behind on their car payments. Before you buy a car, be sure to set a minimum of what you’re willing to pay for a vehicle, and be sure you know the final price of the vehicle, not just your monthly payment amount. And for those that are lucky enough to have access to quality mass-transportation, be open to the idea that you may not need a car at all; certainly not a new one.
  • Student loan confusion. All student loans are not created equal. With student loan debt topping $1.57 trillion, be sure you understand all the repayment parameters prior to signing a loan agreement. Also be sure to meet with a financial advisor at your school in order to discuss potential scholarships, possible tuition reduction, and the various loan and repayment options available. For many college students, taking student loans is their first foray into adulthood, and it’s easy for unscrupulous lenders to take advantage of their lack of knowledge.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2019 Advisor Websites.

Written by Perigon Wealth

Latest Insights

Last Week in Review – September 16, 2022

Last week, stocks fell sharply as inflation fears intensified and short-term bond yields reached levels last seen in 2007. The S&P 500 Index recorded its most significant weekly drop since mid-June and hit its lowest point on an intraday basis since mid-July. Growth stocks fared worst, with the technology-heavy Nasdaq Composite falling nearly 5.5%. Communication services and information technology shares led the declines within the S&P 500 as Google parent Alphabet and Facebook parent Meta Platforms hit new 52-week lows. Industrials and materials shares were also fragile.

Inflation! Recession! Market Volatility! OH MY! How do we handle scary economic news?

The news – coming at us from every channel, broadcast, blog, or tweet – can sound scary and grim. Inflation, potential recession, rapidly rising interest rates, the wildly gyrating stock market … It’s enough to make us want to tune out the news completely or throw our investment statements in the shredder unopened.

Global Market Commentary August 2022

Global Equities sunk 3.68%% in August on fears of more aggressive interest rate hikes by central banks in their fight against soaring global inflation. The MSCI All-Country World Index is off 17.75% YTD, its worst eight-month start to a year since its inception. Global bonds were unable to provide reprieve, as the Bloomberg US Aggregate Bond and International Bond indexes fell 2.83% and 3.46% respectively this month and they too are off to their worst start in their index histories with YTD returns of negative 10.75% and 10.21% respectively.