The Rachel Cruze Show - Why 51% of Americans Are Struggling In Their Finances

Episode Date: November 29, 2024

💵 Sign up for EveryDollar today to create a free budget! We surveyed Americans to learn more about their money behaviors and, guys, the insights are eye-opening! In this episode, you’ll find out what’s keeping people broke and, more importantly, what we can do about it. Next Steps: 🎥 Watch my video Do This EVERY Time You Get Paid (Paycheck Routine). 💸 Learn how to win with money by enrolling in Financial Peace University. Connect With Our Sponsors: 🏥 Learn more about Christian Healthcare Ministries. 🔒 Get 20% off when you join DeleteMe.   Listen to More From Ramsey Network: 🍸 Smart Money Happy Hour 🎙️ The Ramsey Show   💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💰 George Kamel 💼 The Ken Coleman Show 📈 The EntreLeadership Podcast   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, hey, you guys. So I came across some pretty eye-opening insights in our recent Ramsey research that I wanted to share with you because we wanted to get a better idea of the attitudes and behaviors around personal finance in our country. So we surveyed 1,06 Americans on what they had to say. So over half, 51% are struggling to pay their bills. So in this episode, I want to talk about what's keeping us from financial freedom and what we can do to break the cycle. So first, let's just take a closer look at the state of personal finance in America. And hold on, because some of these stats, there's a lot of them, but again, it just paints the full picture, okay? So 51% of people reported having a hard time paying their bills. 42% are struggling to cover food costs with most people spending more on groceries and utilities than last year. And if you're a renter and feel like you're paying a high price, well, you're not alone. Because 64% of renters reported have having difficulties paying the rent. Research also revealed a pretty worrying trend that 34% said that

they're either struggling or in a financial crisis. So you guys, that's one-third of Americans. Okay, so how did we get here? Well, there's several reasons that is causing this widespread financial strain. Part of it is inflation and the rising costs on just, you know, what it takes to live life today. And because of that, there's a heavy reliance on credit cards. So with 40% of people leaning on credit for their daily expenses, it really is clear that we're in this cycle. And so that's when you see you guys that, again, it's not credit, you know, some people are using them for vacations and all of that. I actually saw a staff that 45% of families that go to Disney spend it on their credit card. But we are finding,

though, in general, though, people are struggling to pay, again, your basic four walls, which is food, shelter, utilities, and transportation. And so that is a really hard spot to be. And again, they feel like their only option then is to rely on credit cards, which, again, puts them in a deeper financial hole. And so what you want to look at overall, though, is getting us back on track by creating better patterns when it comes to our habits. So living beyond your means, that is a pattern that people are in that was causing some of this. And we live in a world, again, where I feel like our expectation of life is pretty high. We're seeing people's lifestyles all over social media. And when it's happening is you assume like, okay, that's all normal. I should live in this kind of house, drive this kind of car, go on these many vacations.

You know, this is how my life should look. This is the normal baseline, which the normal baseline that is being put out in social media is insane, y'all. It is a very high baseline. It is a very, I would say, glamorous way to live, if you will. And so our expectations have to be lowered on what it looks like to live life. Also, people's pattern, which is not good, is ignoring a budget. And so if you do not have a plan when it comes to your money, you don't have control over your income. There's no other way around it. And so really getting in control of that and what's powerful about a budget, a lot of people say they feel like they got a raise because you actually are taking account on what you're spending your money on.

You're actually seeing, hey, here's how much groceries are a month. and maybe I have to say I'm going to shrink some of that down to get margin, which means I'm going to have to, you know, maybe buy at a different grocery store. My grocery list is going to look different. Or here's subscriptions that are constantly being fed out of my account that I'm not using and didn't even realize I signed up for. So it just gives you a really overall picture on what your expenses are, which is helpful because you're probably going to be cutting some of those if you are in debt to get yourself

on a foundation financially that's really, really studied. All right, credit card use. is another pattern that, again, we want to get rid of because that causes a paycheck to paycheck living cycle because you're always behind. When you're paying something that you've already used, you're going backwards, financially speaking, versus a debit card, for instance, that you're paying as you're going. And so living in the present and in the future, looking ahead, is a really important way to view your money versus just paying for everything in the past. Because when you're paying for the past, that means when you're actually charging it, you're not feeling the pain as much.

There's also a lack of savings. So with 33% of people saying they had no savings, you guys, that means if emergencies come up, unexpected expenses, there's no money for that. So what's the backup plan then? Credit cards. And then that gets people in a deeper hole because guess what? There are unexpected expenses in life. There are emergencies that happen. So being able to plan for that. So in your budget, having a miscellaneous category, the catch-all, and I'm telling you the cruises, we use it every month, almost up to what we budget for every time, because there's just stuff that comes up. I wish I had my phone on me because I would just, I would read them out for you because I'm like, it's still the most random stuff that you just don't think about that comes up

so you don't want your budget completely out of whack. So planning for that, and then also planning for emergencies. So getting that $1,000 emergency fund is so key. And then once you're out of debt, bumping that up to three to six months of expenses. So when emergencies happen, you're credit card isn't your backup plan. You are your backup plan. Your money is, which is great. Now, you might be feeling discouraged right now, but listen, don't get too down because there is a way to get out of all of this and have a really stable situation. So kind of what we talked about, let's talk about the inverse. Again, budgeting. That's about how important that is, how important it is to have control over your income because that's going to take you so far.

And if you have not budgeted before, check out every dollar. This is our budgeting app, which is incredible. If you go to every dollar.com slash Rachel and build your first budget for free. And it's a learning card for sure. So have some patience when you're doing it. But again, you're going to start to feel this control over, wow, I have a say in what's going on and not just letting life happen to me. The emergency fund, we talked about this, the $1,000 in the three to six months of expenses. You guys, this is so powerful. When you don't have debt and you have three to six months of savings in the bank, there is something that happens, a level of peace that occurs, that

is it's unbelievable. Suddenly you just feel like, okay, I have options in my life. I'm not like living this stressful life, every paycheck, every paycheck, every paycheck. There is something freeing about knowing that you are in control of your money. Also, ditch the plastic. Yeah, credit cards. Just take them out of your life. And here's the thing. This is one part of life and money that we get a lot of pushback from. But just live with a debit card for a season, okay? Give yourself six months and just say, I'm not going to spend on a credit card. I'm going to spend on a debit card. I'm going to budget. I'm going to track my transactions in every dollar. I'm going to live this thing out. When you do that, there is, again, that level of peace and control that happens that gives you

such power to make really wise decisions with money. And it changes the game on purchasing. I mean, there's so much that changes. So do it. And if you hate it and you're like, Rachel, I don't agree with you. Trust me, the credit card companies have open arms ready to accept you back again. And it is very easy to go get a credit card if you want to get back in. But again, there's something about this autonomy of living with your life and your money that's really powerful. All right. Also, education. So 53% of Americans weren't taught about money growing up. And so this is a really important part of this piece of the puzzle that if you do have, you know, kids in your life and you do have that next generation, be thinking about this. There's something

really beautiful about starting as early as possible of seeing how money is handled talking about money that you can really set your kids up for success. But if you didn't get that financial education, then start diving in, listen to podcasts, you know, read books, do these things that really help you learn how money works. You know, we have Financial Peace University, which guides you through money. I mean, everything, from getting out of debt to investing. And the really great thing I think about Ramsey content too is that we give you the cookies on the bottom shelf. Like, you're going to understand this stuff and you're actually going to be able to implement it. It's nine lessons and it's everything you should have been taught in high school.

It's all the lessons that you should have learned when you graduate. Because let's be honest, we don't use half the things that we learned in math. You know, we don't. But we should have learned how to do a household budget. Can I get a name in? And how taxes work and all of it. So make sure to sign up and take that out. Okay.

So there you go, you guys. I mean, listen, even through tough times like we're feeling in our economy right now, you can still break habits that are not great for your money. Those bad money habits can get out of there. and you at one step at a time can change the way you view and handle money. So I really hope that this encourages you to at least take that first step if you haven't yet because there is hope. And if you want some more amazing financial tips,

make sure to check out my paycheck routine video to really start making smart decisions with your money. All right, you guys, remember to take control of your money and create a life you love.