People might not be telling the truth about their financial goals, looking at a report issued by Northwestern Mutual, which surveyed people about their financial planning and how they are progressing toward reaching their financial goals.
While more than half of the survey’s respondents indicated that paying down their debts is their top 2018 financial priority, the average amount of debt carried by those individuals increased from 2017 to 2018, rising to $38,000 from $37,000 a year earlier. Furthering the argument that what people are saying is different than what they are doing are these other data points:
- Americans are twice as likely to have accumulated $5,000-$25,000 in debt (33%) rather than personal savings (17%)
- Fewer people said they carry “no debt” this year compared to 2017 (23% vs. 27%)
- Two in 10 people allocate a staggering 50%-100% of their income towards debt repayment
- More than one-in-10 (13%) Americans say they will be in debt for the rest of their lives
Credit cards are the leading source of debt in 2018, surpassing mortgages which was at the top of the list a year ago.
Making matters even worse is that individuals might not fully understand the impact that carrying large amounts of debt has on their financial lives. Thirty-five percent of those surveyed said that debt has no impact on their ability to achieve financial security, and an additional 21% said it has little impact on their ability.
As might be expected, when looking at generational demographics, millennials are carrying significantly more student loan debt than members of other age groups. Among millennials, 21% of their debt is from student loans and 20% from credit cards. For members of Generation X and Baby Boomers, mortgages were at the top of the debt list, followed by credit cards.
