MoneyTalk: 2019 Personal Finance Year in Review

Today we’re talking about our 2019 Personal Finance Year in Review. Our annual year in review webinar has been hosted for the past 5 years by Dr. Barbara O’Neill and today she shares the 5 biggest highlights of this webinar.
Watch the recording.

Show Notes

1. What are some interesting 2019 research study results that were mentioned in the webinar?

• The 2018 NFCS: 53% of 27,091 respondents agreed that thinking about finances made them anxious
• Hearing about low saving amounts can de-motivate poor savers (they feel they are part of a big group)
• Avoid “thinking blind spots” about financial goals by offering clients a master list of goals to pick from
• Evidence of “as soon as…” thinking (sequential goals); encourage funding multiple goals concurrently
• People respond better if you frame savings deposits granularly (i.e., $5 daily deposits vs. $150 per month)
• Take care of physical health to reduce dementia risks with the same practices to reduce heart disease risk
• People cut spending when they are told they spend more than others in similar circumstances
• 57% of Millennials spent money they weren’t planning to on products they saw in social media feeds
• HS personal finance course mandates were associated with smarter student loan borrowing decisions
• 1 in 4 older adults report feelings of isolation; may shorten life expectancy as much as smoking

2. What were some interesting findings from federal government agency reports?

• The Survey of Household Economics (SHED) found that 3 in 10 adults have a variable family income
• SHED also found that 39% of respondents could not cover a $400 expense without borrowing or selling
• SHED also found that 1 in 5 adults had major unexpected medical bills; 25% have no savings or pension
• The Census Bureau reported that fewer Americans are living in poverty but more lack health insurance
• Poverty rate was 11.8% (lowest level since 2001); 27.5 million people lacked health insurance
• CFPB youth financial education report: well-implemented mandates improved financial behaviors

3. What were some interesting financial events related to taxes and investing in 2019?

• More than 25 million taxpayers switched to claiming the standard deduction instead of itemizing
• Only about 10% of tax returns included itemized deductions vs about 30% previously
• About 20% of taxpayers were under-withheld in 2018; the IRS subsequently relaxed the penalty trigger
• The IRS unveiled a new tax form for taxpayers age 65+ that will be available for next tax season
• The IRS unveiled a draft of a redesigned tax withholding form for 2020 and beyond
• Morningstar announced that it is planning an evaluation system for cryptocurrencies
• Some states are considering state-level fiduciary rules for financial advisors
• The stock market had bouts of volatility; in November 2019, the DJIA index crossed 28,000

4. What were some interesting financial events related to credit and banking?

• The average annual percentage rate (APR) on credit cards was 17% (highest rate in > 2 decades)
• Reason: Creditors are charging higher rates to offset generous rewards programs that eat into profits
• Robo-advisory firm Betterment started an FDIC-protected savings account with a 2.69% yield
• Other fintech firms such as Wealthfront and SoFi have also launched non-bank banks
• About 106 million credit card customers and applicants were affected by the Capitol one hack
• Terms of the Equifax hack settlement were announced: 10 years of free credit monitoring or up to $125
• Three Federal Reserve interest rate cuts took place in 2019, almost reversing 2018 rate increases
• ATM fees climbed to a record high in 2019 and the average overdraft fee was $33.36

5. What were some other interesting 2019 financial trends and events?

• Average light duty car prices increased to $37,401; the average car loan is $32,119
• The average new car loan term reached a new high of 69.17 months (almost 6 years)
• 2019 was 50^th anniversary of financial planning profession which began with a 1969 small group meeting
• The state of Pennsylvania launched a child savings program called Keystone Scholars
• 29% of oldest Baby Boomers age 65-72 are working/looking for work (highest rate for ages in > 50 years)
• Millennials: approaching middle age in worse financial shape than every living generation ahead of them
• Payday loan protections to ensure that civilian borrowers could repay loans were rolled back by the CFPB
• The print version of 47-year old Money magazine ceased publication
• The 35-day federal government shutdown exposed the financial fragility of many U.S. households
• Auto loan delinquencies surged past Great Recession rates; 7 million borrowers are 90+ days behind