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Benefits of Debt Consolidation

8 Facts about Money That Could Improve Your Financial Health

stacking coins to grow

Understanding money is not always easy.

There’s a lot to consider when it comes to personal finance — spending habits, good debt versus bad debt, investments, taxes, savings, retirement and more.

But the more you know, hopefully the more you can improve your financial future, pay down debt and reach your goals.

Consider these interesting facts about money that could increase your knowledge and contribute to your financial literacy.

1. If you have debt, you’re part of the majority.

The vast majority (80 percent) of Americans have some type of debt. The important thing is that you have a plan for paying it back over time in a way that works with your budget.

2. The average American spends 17.5 percent of their income on interest.

The average American spends as much as $8,037 on interest payments annually (for home loans, car loans, credit cards, etc.). That’s about 17.5 percent of the median yearly income of $48,672 or $936 per week. If you’re paying higher interest debt, credit card debt consolidation may be one effective way to reduce that amount. More on that later.

3. Nearly half of Americans can’t cover a $400 emergency.

Not only that, but half of Americans have less than $1,000 in savings. This may be part of the reason an increasing number of people have turned to personal loans to pay for emergencies and major expenses. A recent survey found that 68 percent of people who have taken out personal loans said it helped them achieve their financial goals, and 70 percent said it made them feel financially responsible.

4. Health care costs as much as $10,000 per person every year.

Health care costs are a major expense. In fact, 26 percent of people cited medical expenses as a popular potential use of a personal loan.

5. It’s not just our health we spend on, it’s the health of our pets.

Americans spend nearly $70 billion a year on pet care. In fact, they spent more than $750 million on their pets just for Valentine’s Day. When it comes to health care emergencies for your dog, cat, bird or other animal, the costs of various procedures can range as high as $5,000, and some have used personal loans to cover pet-related expenses.

6. The average household credit card debt is $16,000.

Whether you’re above or below the average, this is another area where potentially lowering your rate with debt consolidation could be a smart way to pay down that debt faster and organize your payments into one monthly amount.

7. Most people don’t save more than they spend.

recent study found that 56 percent of Americans either spend more than they earn or are just breaking even. Meanwhile, only 14 percent could answer all five questions on a financial literacy test. Making saving a part of your daily routine could help keep you in the 40 percent of people that spend less than they make.

8. Money is our biggest source of stress.

Money outranked even health as a stress point in a psychological study. Saving more, relaxation techniques, forgiving yourself and simplifying debt could be ways to find relief.

Knowledge, Simplicity, Responsibility

With more knowledge of the facts about money, you have more context about many people experience in their financial lives. It’s a complicated subject and often there are many obstacles to reaching the financial future you want.

By simplifying your debt with responsible borrowing, you may be able to achieve greater control of your money.

Find more resources on Discover’s financial literacy content hub.