Many Americans (especially young Americans) today are struggling with overspending. We can see this as credit usage across different age ranges has rapidly increased over the past few years. With the average credit card debt for Americans hanging around $6700 per borrower and Gen Z Americans holding about $3400 in credit card debt per borrower, and the fastest-growing delinquency rates (10%+) across any age group (data from Experian).
For many, this is not a cost of living/inflation problem, but rather a spending on needs versus wants. Now, I want to be clear and not discount the rise in prices and cost of living; however, the data and analytics show this has a higher impact on a geographical basis than a nationwide basis, meaning that where you live plays more into your cost of living than the general increase in cost of living across the United States.
I recently spoke with a young married couple who had great income and little to no expenses, yet they were falling behind and racking up credit card debt. So we sat down and discussed needs versus wants and then goals.
What does this look like for you?
Let’s work backwards, start with a goal. For some, this is retirement; for others it is buying a house, land, growing a business. If it’s money-related, we’re dealing with a math problem. How much will this goal cost (ballpark it and overestimate it)? Then ask yourself, how much time do I have till I achieve this goal? How much can I save/invest? Or how much do I need to save/invest to reach it by the given deadline? Maybe we land on saving $50 per month, maybe it’s $2000 per month, maybe we don’t have enough income to save what we need – then we move on to a different discussion (new job, working more hours, side gig, adjusting expectations).
At Masters Financial Group, much of what we do for our clients looks like working through a framework to answer questions about reaching your goals and the relationship with spending on needs versus wants. Our job is not to tell you what you should and shouldn’t spend your money on – all we can do is look at the whole picture and ask you questions. We also don’t want to build you a plan that works to achieve your goals, but isn’t flexible enough to change and deal with life’s curveballs.
If you’re interested in seeing what working with a dedicated team of financial advisors and planners looks like and how we can help you, we would welcome a conversation. Remember, behavior beats math, and financial peace looks like having the resources to do the things you enjoy with the people you love.
Andrew Rabon, Financial Advisor
864.765.0374
Securities offered through LPL Financial, Member FINRA/SIPC. Content provided here reflects personal views and has not been reviewed by LPL Financial for accuracy or completeness. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute personalized financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.