Looking back, you may think that your parents appear to have their finances together. Though your parents may not have made more money than you, they were content.
Today, we’re dealing with new financial problems our parents never had to face. There were financial difficulties before, but today’s money problems have become more complicated over the years. The new money problems need to be explored.
Income Flow Not Guaranteed
The companies are resorting to cut back on employment thus there is no guarantee of having job anymore. Those who have retired can’t live with the benefits they receive. Along with no jobs in the future, current employees have no assurance that there will be retirement benefits for them. Many companies are shunning away from pension-plan model.
Rising Cost of Health Care
Though it was considered high at that time, fifty years ago, health care spending was at $23.3 billion. Now, it is estimated to be over 3 trillion and growing. According to the annual Milliman Medical Index, the typical cost of an employee-sponsored preferred provider organization plan (PPO) for a family of four is $26,944.
Identity Theft Taking Toll
Surely, there were cases of identity theft few decades ago. But magnitude of identity theft is felt somehow by clear majority of the population.
In 2016, 15.4 million consumers lost a total of $16 billion to identity theft. Cases of identity theft that are more complicated to resolve are also on the rise: account takeover fraud, or when someone hacks into an existing online account by stealing the login credentials, went up to over 30%.
Surmounting Debts Continue
In the early 1960s, the average American’s debt was about $4,000. Now, it’s a stunning $137,063! That includes credit cards, mortgages, auto loans and student loans.
Credit cards with buy-now-pay-later concept has generated average outstanding balance close to $20,000. Reportedly average American has 2.6 credit cards.
Increasing Cost of Living
The health care cost is increasing, so is the cost of living. In 1967, the average home price was $22,200. Compared to today, the median home price in the United States is $203,400. That’s an 816% increase over a 50-year period! Education, housing, food, transportation and medical costs have soared.
It is plain and simple to realize that only way to survive (manage) financially is to create your own economy that will survive the test of times. In another words, taking control of your finances.
- With a 401(k) and a Roth IRA, you’re in control. Saving of at least 15% of your household income in good growth stock mutual funds is recommended.
- Protect bank accounts & finances with identity theft insurance. Cancel or reduce credit cards.
- Open Health Savings Account (HSA) that is tax-deferred providing you a cushion for your out of pocket expenses.
- Grow your income enhancing your skills to earn more or have side gigs to provide additional income flow.
Ultimately, your money situation is what you make of it. Deciding to get out of debt is an important step, and it’s the first step. Simply either you control money or let debt control you.