I'm always on the lookout for personal finance trends. Earlier this year, I stumbled on a fantastic 2019 year-end recap from the Military Families Learning Network. Read on for five of the trends and studies they highlighted, plus your personal finance action items.
Trend 1: We like the herd. It makes sense; we're social creatures. That can be good or bad. If we hear that we're spending a lot more on restaurants than our peers, it could encourage us to use the dining room table for its intended purpose. On the other hand, our peers can validate our bad habits. I come across -- and share -- plenty of studies showing that Americans are doing a poor job saving for retirement. While my intent has always been to highlight an area for improvement, maybe I've been sending the wrong message. Folks could be thinking, "Hey, I'm not alone. Maybe it's OK."
Your action item: Blaze your own trail by establishing goals and creating a personalized plan to achieve them. Regardless of what others are doing or failing to do, you'll have a clear path to success.
Trend 2: We like to take one step at a time. If I look down and to the left, there's a checklist sitting right next to my keyboard. There's nothing like leaving at the end of the day having worked my way from top to bottom. While I'm not much of a multitasker, when it comes to financial goals, multitasking may be a necessity. For example, having every cent of debt paid off shouldn't be a prerequisite to saving for retirement.
Your action item: Review your financial goals and, if you're not already doing it, look for opportunities to go after them simultaneously.
Trend 3: Second jobs are common. Bankrate's Side Hustle survey indicates that about one-third of Americans are making money outside of their main employment. Unfortunately, the same survey indicates that the extra income is a necessity to cover regular living expenses.
Your action item: Work both ends of the budget to create space for financial good. In other words, look for opportunities to cut expenses and boost income to pay down debt, save and invest.
Trend 4: New car loans are nearing 70 months. That's the average length of a new car loan, according to Experian. My advice is to shoot for a loan you can pay off in fewer than five years. If you can't make that work, look for a different car or hold off on the purchase.
Your action item: Make the right call on your next car purchase.
Trend 5: Our finances are fragile. The government shutdown that ended last year shed light on the value of emergency savings. A Prudential study, appropriately titled "Financial Fragility," of several hundred federal workers and government contractors found that 49% fell behind in paying bills and 42% increased debt when they encountered an income disruption.
Your action item: Build an emergency fund today. While the equivalent savings of three to six months of core expenses is ideal, even $1,000 can help bridge a small gap.
Want to learn more? Check out Military Families Learning Network.