According to Pew Charitable Trust, 43% of Americans whose childhood homes are in the bottom economic quintile remain as adults. Those children grow up in a lower economic bracket, and they tend to stay there.
Financial statistics show that people who are born poor are more likely to remain poor throughout their lives. Only 4% of children born at or into the bottom, economically, rise to the top.
In contrast, 40% of people born in the top quintile remain there for the rest of their lives. These children born in a higher economic bracket tend to stay in that higher bracket.
Americans raised at the top and bottom of the income ladder are likely to remain there, themselves as adults. This lack of mobility is referred to as “stickiness at the ends,” as the people born on both ends of the income distribution are more likely to stay in the bracket they were born into.
People born in the middle income bracket have a 50-50 chance of ending up in a higher or lower income bracket.
A spending plan isn’t always a comfortable topic, especially for people dealing with debt and bills. However, I believe that it is one strategy that can, among other things, change the stickiness dilemma.
Regardless of your current financial position, a spending plan and an understanding of the financial landscape can provide interesting and valuable insight as you move along your journey toward a better financial situation. It allows us to see where you are and the improvements that need to be made. A spending plan is the first step.
If you have never used a spending plan or budget you are not alone. According to a Penny Hoarder survey, A little over 55% of Americans do not use a spending plan to manage their money.
Similarly, 56% of survey respondents said they didn’t know how much money they spent last month.
Those who kept a spending plan were more likely to know how much they spent and where they spent money. They were also less likely to had squandered on something that deterred the ability to pay bills.
A spending plan or budget is extremely useful in helping people keep tabs on their spending and reach financial goals.
Nineteen percent of respondents said they didn’t use a spending plan or budget because they didn’t have the time or energy and another 19% chalked it up to lack of organization. And 6% of Americans said they don’t budget because they know they’ll overspend anyway.
Creating a spending plan is one of the goldenrule$ of managing money better.
If you’ve never budgeted before, it can be difficult to know how to best go about it, but I encourage you to subscribe to my blog here and learn how a practical and well thought out spending plan can help you manage your money better and reach your financial goals.