This May Be Why It Is Hard To Save Money

October 14, 2019

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If you find it hard to save money for a rainy day, you are not alone! Analyzed numbers from the Bureau of Labor Statistics shows the average American earned $78,635 in 2018 and spent $61,224 of it, which means we’re spending about 80% of our income. After taxes are taken out, that percentage jumps even more. Biggest expense on the list is housing, which consumes 25% of our income. But one category that’s been on the rise is education. Although the costs of tuition and fees has increased less than 4% from the 2017-2018 to the 2018-2019 academic year, it has increased a whopping 392% increase this year from 1990. In other words, college tuition costing $20,000 in the year 1990 would cost $98,534.90 in 2019 for an equivalent purchase. Compared to the overall inflation rate of 2.33% during this same period, inflation for college tuition was significantly higher. Eating out and entertainment have been increasing as well, while the cost of buying a new car has also jumped. The breakdown found that people in the 45-54 age group has the highest mean salary ($109,366), while the 75 years and older age group spends, on average, more than they make ($43,181 spent vs. $38,786 earned). Although our dollar may not be stretching as far as it once did, you can still make an effort to cut back or cut out on non-essential items.  One of the easiest ways to save is to automatically have a portion of your paycheck sent to a separate savings account with limited access.  Another great way to maximize savings is contributing to your 401K at least up to the match your company makes. Also speaking with a financial advisor can help you better manage your income. 

SOURCE: Moneyish

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