Family Financial Planning

Abstract

_During the second half of the 20th century, the level of living for most American dramatically improved over the level enjoyed by their grandparJnts. By almost any standard used, most Americans today should be hnancially weil off. How-ever, there is a lot of data that indicate,s plople are having serious probl-ems managing their hnances. $snkruptcies are at an all time high, so are mortgagi foreclosures.-Consumer debt is breaking records, while savings rates continue to deJline. In spite of many gou".o-"ot transfer programs, the number of Americans living in poverty is not thai iuch better than it was 30 years ago,-with many older Americans joining the poverty ranks. The divorce rate in America is high and researchers .epori that -family financial problems usually play a key role in almost all separations. Most Americans' real income is much higlg. than it was one, two and especiilly three generations ago; so why all the hnancial problems.Americans now live --.11y, p-y years longer than their grandparents, so funding retirement is much more difficult than it was io the past. fhJ quality of medical carE has_vastly-improved during this century, with costs increasing even fister. Before the 1950's only a very small percentage of the population attende-<l college. Today going to college is the-goal of most high school graduales, but a college educition is secJnd JUy to the cost of a home, and a student is often still paying oo t-h" loan 5 to 10 years aftei graduation. Inflation's impact has been felt in oiher a.eas as well. Housing costs 20 times as much today as it did at the end of World War II. It now costs more io buv the 3u9T3_ge car today than it cost to buy the average house 20 years ago. In{lation has made it difficult when trying to_ develop plans to fuid intermediate ani long-term goals such as.college educations and retirement. Taxes were not important duri-ig the filst half of this century.Most people did not pay income taxes until after the End of the great depression of the 1930's. Before t950, Social Security taxes took less than LVo"of a person's wages._-Tg{ay's rate is closer to 8Vo. Property and sales taxes were relatively unimportant. If all of this was not challenging ioough, during the past ten yeari hundreds of new and different types of investme'nt and-insurancJ products have'been developed. The consu.rer is coniused when forced to make choices. Ifaffluence has no other impact, it has made life more hectic.