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This was the first year that I actually wrote down goals for myself. I’ve always set mental goals, but there is something solidifying about writing them down. I set two main financial goals for myself for this year. The first was to increase my net-worth by 25%, and the second, save 70% of my take-home pay.
I think that I will be able to reach my net-worth goal for the year. However, it looks like I may fall a little short when it comes to saving 70% of my take-home pay.
Recently, I stumbled upon a NerdWallet study. They surveyed the average American’s top 10 financial goals over the next 10 years. Truthfully, I couldn’t wait to read the study’s findings. I’m always curious to know how people go about their personal finances.
Unfortunately, as I began to read the list, I became a little depressed. Some of the goals that people put on the list left me scratching my head. So, here is some running commentary starting from the bottom to the top of the average American’s top financial goals. Enjoy!
10. Saving for a Wedding – (8% of Americans are saving for this)
Every year, The Knot provides a breakdown of the cost of an average American wedding. In 2016, it was a whopping $35,329. As you can imagine, costs will probably continue to rise.
Breakdown of the Average American’s Wedding Budget in 2016:
|Category||National Average Spending, 2016|
|Overall Wedding (excluding honeymoon)||$35,329|
|Venue (reception hall)||$16,107|
|Groom’s attire and accessories||$280|
|Catering (price per person)||$71|
|Source: The Knot
Clearly, hosting a wedding is not cheap. You can see why so many Americans are saving for their dream weddings.
9. Saving to Have Children (8%)
In a recent post, I wrote about the cost of raising children. The average child in America costs $233,610 total, to raise until the age of 17. This equates to around $14,000 a year, according to the latest figures from the Department of Agriculture. The USDA also suggests that this estimate varies greatly depending on which part of the country you reside.
|Location in the US||Total Cost|
|Urban Areas in the South||$221,730|
|Urban Areas in the Midwest||$217,020|
|Rural Areas (all over)||$193,020|
Thankfully, there are mitigating strategies to lower costs, such as shopping at thrift and consignment stores. Raising children does not have to be as expensive as the experts tout.
8. Starting a Business (10%)
I was really surprised when I saw this on the list. I didn’t realize 1 out of every 10 people is saving money to fund a new business. However, it makes sense when you dig into the numbers.
Since 2012, 13% of Americans have started or are running a business in the United States, which is the highest amount of new entrepreneurs since 1999.
According to BizJournal, the median entrepreneur requires $15,000 in order to start up their small business, with 80% of the money coming from friends, family or personal savings.
7. Buying a Home (23%)
According to the National Association of Realtors, nearly 8 out of 10 of non-homeowners indicate that owning a home is part of the American dream.
The average down payment to buy a home in the US is 11%. For those under 35 years old, the average down payment is 8%. Since the average price of a new home is $385,200, the average American must save around $42,000 for a down payment on a new home. For those under 35 years old, this figure is almost $31,000.
6. Buying or Leasing a Car (27%)
The average age of a vehicle on the road today is at an all time high of 11.6 years old. The length of vehicle ownership has extended to almost 6.5 years. Interestingly enough, people keep used vehicles on average around 5.5 years.
I always thought my 9-year-old vehicle was “old”, but in reality it hasn’t yet reached the average age of a vehicle on the road.
5. Opening a Retirement Account, or Ramping Up Contributions to an Existing One (28%)
This percentage is a lot lower than I would hope. According to Go Banking Rates, 1 in 3 Americans has $0 saved for retirement. 75% of Americans have less than $100,000 saved for retirement. Thus, I would hope that more than 28% of people would want to increase their retirement savings over the next 10 years. As I stated in related articles about the average American’s IRA and 401(k) balances, there is a lot of room for improvement when it comes to saving for retirement.
4. Saving for Vacation (31%)
This one shocked me. I am a big proponent of vacationing and the benefits that follow from some time away from the office. However, I couldn’t believe that people prioritize their vacation plans over saving for retirement.
The average cost to vacation in the U.S. is $144 a day or roughly a $1,000 a week. In terms of international travel, the cost is almost twice as much at $271 a day or roughly $1,900 a week.
Even though traveling can be expensive, I would have assumed that saving for a vacation would be further down on the list.
3. Avoiding Further Debt (42%)
According to data by Experian, the average American dies with $61,554 of debt, including their mortgage. Excluding their mortgage, the average American dies with $12,875 of debt.
This seems like a lot of debt to carry so late in life. The average male lives until 77, while the average woman lives until 82.
I would love to leave a legacy for our children such that they will receive an inheritance. I would hate for our children to have to sell our assets after my wife and I die in order to pay off our debts. This is why my wife and I try our best not to carry any debt.
2. Saving More Money (53%)
Currently, 57% of U.S. adults have less than $1,000 in savings. 39% of adults have no savings at all. As you know, I encourage people to set aside an emergency fund that could cover 3-6 months worth of expenses. After you accumulate enough in your emergency fund, you are able to invest any additional money.
Do you wonder why most Americans don’t have enough saved? Because they just don’t have enough, apparently. 54% of Americans say that their financial management would be easier if they had more money. This doesn’t seem like a valid excuse though, as 41% of people making $100,000 or more each year stated life would be easier if they had more money.
1. Paying Down Debt (58%)
Yippee! I was happy to see this as #1. It tells me that most people recognize that they need to address their debt. The average American with credit card debt is almost $16,000 in debt. Although the scary aspect is that 87% of Americans rate their money management skills as fair, and 59% of Americans rate their ability as excellent/good.
If they’re looking for a jumpstart, I’d be remiss not to mention my post on How to Be Debt-Free.