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How Average Are You?

by Chris Poindexter

It’s a given that no one wants to think of themselves as average. This desire to be better than average manifests itself in strange ways. One area it shows up is in how Americans view their own driving skills. The average person thinks they are a better than average driver. According to a 2011 survey by Allstate, men are more likely to rate themselves as excellent drivers than women. College educated people rate themselves to be better drivers and, by a wide margin, Republicans think they’re better drivers than Democrats or Independents. Scientists even came up with a name for this phenomenon called illusory superiority.

There are, however, several problems with viewing and operating one’s life through the lens of statistics and statistical averages. Doing so tends to become a label and classification rather than a snapshot of abilities at a particular time in life. It ignores the amazing capacity we as human beings have to remake ourselves, to learn new skills and excel in areas where we formerly lagged. This is especially true when it comes to finances. So as we look over what’s typical in American finances, don’t see your position as being below average, see it as an opportunity to move your personal financial bar.

The Average American Is Drowning In Debt

The average American owes $95,000 on their mortgage, $16,000 on credit cards, and the average car loan is $27,000. Younger people can add another $20,000 to student loans to that total. For the average person debt is a lifestyle that saddles their finances with the hidden tax of debt service for nearly their entire lives. Student loan debt is choking off the productivity of people who are at the most economically productive point in their lives. Seriously people, $16,000 on credit cards? What on earth are you buying? The average interest rate on credit cards is 14%-15%, cut up that plastic!

The Average American Makes $50,000 a Year

In 1986 the band Timbuk3 came out with a song called “The Future’s So Bright, I Gotta Wear Shades” where the character in the song has a job waiting that pays $50,000 a year. Today that’s still pretty much the average salary. In the modern world this is becoming an increasingly deceptive statistic as the “average” is being blown out by massive discrepancies between the top and bottom of the wage scale. If you’re making anything over $37,000 today you’re doing pretty good.

The Average American Has No Emergency Fund

If you’re looking at credit cards as your fallback in case of a medical emergency, major car repair or other financial crisis then you are the half of America that’s one illness or accident away from financial disaster. Step one in improving your financial life is getting out of this group. Instead of using your income tax refund to buy the latest iPhone, use your old phone another year and set up an emergency fund.

The Average Amount Saved For Retirement Is $35,000

If you’re in your 20s that is a great number, unfortunately, for the average person in their 20’s the real figure is $0. The lack of retirement savings is pushing older workers to stay on the job longer. Instead of enjoying the best time of their lives, too many are putting themselves through the daily stress of working longer. It’s a sad thing that so many who could be happily retired and making way for younger people to take those high paying jobs, more people are staying on the job.

If you’re ahead of these averages, good for you. If you’re at the trailing end of the curve, don’t get depressed. My wife and I used to be very statistically average people when it came to finances and, just 10 years later, we crush the averages in every category. If we can do it, so can you.

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