Statistics About Budgeting: Personal Savings, Planning and Spending!

Written by Remus Zoica in Budgeting And Planning Last Updated November 20, 2023

If you’ve ever wanted to know more about the personal budget planning industry, especially the statistics about how people manage their personal budgets, then you should keep reading. You’ll probably never hear about this kind of stuff in your next personal finance class. This is because, most of the time, popular online resources focus more on individual guides and less on sharing a better overall perspective on the subject. You may think that today’s adults are living more frugal, money-conscious lives, and as a result, people are saving more money than in the past. Or you may think that as trends in our economy and society shift and marketing initiatives become more and more aggressive, people tend to spend more. Whatever may be the case, I hope this article will paint a more realistic and down-to-earth perspective on the current state of personal finance and personal budgeting.

Budget Statistics:

1) 44% of Americans don’t use budget planning tools.

According to a survey done by Clutch across the US in July 2020, 44% of Americans don’t use any budget planning tools like Excel / Worksheet, Mobile App, or Financial Planner. These findings showed that 44% (out of the 502 Americans who participated in the survey) sought outside help to make their budgeting goals a reality. Respondents were from the South (33%), Midwest (32%), West (23%), and Northeast (11%).

2) 58% of Americans feel comfortable creating a personal budget.

According to the same survey, most Americans feel comfortable creating a personal budget. This might mean that motivation is a bigger problem than difficulty or comfort. That’s important for any financial advisor to know because they should be spending much more time motivating their clients than explaining the methodology and technicalities of the budgeting process.

3) Only around a quarter of Americans have some kind of written financial plan.

In the 2019 Modern Wealth Survey by Schwab, more than a third of Americans admit their spending habits have been influenced by images and experiences shared by their friends on social media. However, this is not the most unexpected finding. Only 28% of Americans have a financial plan in writing. What interests us the most is that nearly half of those without a plan say it’s because they don’t think they have enough money to merit a formal plan. About 18 percent say it’s too complicated, and 13 percent say they don’t have enough time to develop one. This means that most people don’t make a written financial plan because they don’t have enough money and believe there’s no point in making one if you don’t have enough money. That’s a perception problem because these people would benefit the most from a financial plan. When you don’t have money, you need to be more careful what you do with it and regularly review if the expenses made were genuinely worth it. It’s similar to that saying, “I’m too poor to buy cheap things.” There should also be one that says, “I’m too poor not to budget.” However, those with limited resources stand to gain the most from meticulous budgeting and planning. This is where budgeting apps like Truebill and Acorns come into play, offering accessible and user-friendly solutions for financial management. A Truebill review, while highlighting some negative aspects, such as occasional syncing issues, also points out that it’s best for individuals looking to gain control over their subscriptions and recurring bills. This app can be particularly beneficial for those who feel overwhelmed by their financial situation, providing a simple and effective way to manage expenses and potentially save money. On the other hand, this impartial Acorns financial review reveals that this app is ideal for people new to investing. It simplifies investment by allowing users to invest spare change from everyday transactions. While it may not cater to more experienced investors seeking advanced features, it’s a great starting point for those who want to grow their savings incrementally without feeling the pressure of significant initial investments.

4) About 70% of Americans say their financial planning needs work.

Next, we will cover the 2020 Planning & Progress Study findings, an annual research project commissioned by Northwestern Mutual, which explores Americans’ attitudes and behaviors toward money, financial decision-making, and broader issues impacting people’s long-term financial security. The research shows 71% of Americans say their financial planning needs improvement.  This means that people are not usually satisfied with what they do. The good news is that they can make a huge improvement with a small time investment in education. The study also gave us a few interesting perspectives:

  • 22% of people consider themselves “highly disciplined” planners. I hope you are in this category 🙂
  • 39% of people consider themselves “disciplined” planners. This means that they know their exact goals and have developed specific plans to meet them, but those plans can deviate at times because they don’t always stay on top of them. This number is unexpectedly high, but nevertheless good news
  • 29% of people consider themselves “informal” planners – They have a general sense of their goals and how to meet them, but they do not have a formal plan in place
  • 10% are not planners and have not established any goals

5) 29% of Americans enjoy financial planning. They love to do it!

The same 2020 Planning & Progress Study shows us that a decently big chunk of people enjoy financial planning. And that they see it as necessary even if it’s not their favorite thing to do. Here are some specific numbers regarding how people feel about financial planning:

  • 29% are excited and inspired. Love to do it!
  • 37% are like: not my favorite thing in the world but know it needs to get done – like a medical check-up
  • 16% are worried or nervous about confronting the financial details of their life
  • 6% prefer not to deal with it until they absolutely have no choice
  • 8% are frustrated and annoyed with their financial situation
  • 3% are skeptical about the value of planning

6) On average, U.S. adults had $65,900 in their personal savings in 2020

The same 2020 Planning & Progress Study found that, on average, U.S. adults aged 18+ have $65,900 in their personal savings (excluding funds earmarked explicitly for retirement like a 401(k), IRA, etc.). And the good news is that that is a 10% increase from the $59,737 average reported in 2019. This means that people are saving more than in the past. Significantly more. This finding aligns with the U.S. Bureau of Economic Analysis data. Another interesting finding is that only one in 10 Americans have no personal savings. But, even though savings are up overall, people are concerned about what could take place over the coming months and years and how it might impact their finances. Some reasons people cited feeling financially anxious include 77% unplanned health emergency, 77% unplanned financial emergency, 76% income, 68% inability to afford healthcare, and 60% level of debt.

7) On average, Americans spend 11.9% of their income on food.

According to research by the Bureau of Labor Statistics in 2020, a single person spent 11.5% of his income on food. This percentage did not increase much for married couples; it was more significant if families had one or two children (13.5% and 13.9% of their income). Housing and transportation had more significant shares (38.5% and 15.3%). Another thing worth mentioning is that Americans spend 11.8% on personal insurance and pensions and 8.4% on healthcare. This means that food, by far, is not the most significant slice of the pie.

8) 39% of Americans would have a hard time covering an unexpected cash expense of just $400.

The report on the Economic Well-Being of U.S. Households in 2020 – May 2021 done by the Federal Reserve showed that relatively small, unexpected expenses, such as a car repair or replacing a broken appliance, can be a hardship for many families without adequate savings. When faced with a hypothetical expense of $400, many would have a hard time covering it. This is similar to the previous year, 2019, a two percentage point increase from 2017. This is a relatively significant change when compared to 2013, when half of the adults would have covered such an expense in the same way.

9) On average, Americans save around 7.5% of their income. More in the Pandemic.

According to the U.S. Bureau of Economic Analysis, Personal Saving Rate retrieved from the Federal Reserve Bank, people saved between 7% and 7.6% of their income from 2015 to 2020. Numbers did not vary much in this time interval, but when the Pandemic hit, these numbers skyrocketed. They reached 16.3 percent in 2020 and dropped to 12% in 2021. If we compare, the recent numbers are similar to what happened in the 70’s, when they stayed high for half of that decade. If we take into account the current inflation numbers, these findings look less impressive. The real question is: do you save at least 7.5 of your income?

10) Most adults spent less than their income in 2020

The last statistic I want to leave you with is an encouraging one. It comes from the Report on the Economic Well-Being of U.S. Households in 2020 done by the Federal Reserve, and it states that “most adults spent less than their income during the month before the survey, although the likelihood of doing so varied greatly by education.” If most people did it, you can probably do it as well. Just educate yourself as much as possible, learn about personal finances, and stay on top of the game with well-defined goals and plans for the future!

Final words:

Budget planning is essential for any entrepreneur who wants to start a business. Budget planning and forecasting can benefit any example of entrepreneurship from the list below. With budget planning, entrepreneurs can better understand their financial situation, develop strategies to meet their goals and manage their finances successfully. Budget planning is essential for entrepreneurs who want to start a business and ensure success.

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