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The U.S. personal savings rate was hovering around 4.6% in February, which was below a decadeslong average of roughly 8.9%.
Economists note that this dip in the savings rate is occurring as inflation continues and wage growth slows.
Deposits at banks have crested but remain well elevated compared with pre-pandemic levels.

The U.S. personal savings rate remains below its historical average, according to the U.S. Bureau of Economic Analysis.
The seasonally adjusted annual rate of personal saving was 4.6% in February. That’s well below the average annual rate of more than 8%, according to the data, which traces back to 1959. In June 2022, the rate had dipped to 2.7%, a 15-year low.

This was a large fall from periods of the pandemic when households across the country were saving as much as 30% of their monthly income.
“Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.
Collectively, Americans have trillions in excess savings compared with expectations leading up to the pandemic, according to Federal Reserve economists.
“That really has helped to buoy the economy,” said Shelley Stewart, a senior partner at McKinsey & Company, “particularly in a place like the U.S., where consumption is such a big part of GDP.”
Federal Reserve economists note that the lion’s share of excess savings is concentrated in the top half of households by income.

But the lower half built up savings in this time, too, according to the central bank’s October note. They noted at the time that the lower half of earners had roughly $5,500 in excess savings per household. Experts believe these stockpiles of cash will begin to dwindle in 2023.
In the months since, headline inflation stayed stubbornly high, at an annual rate of 5% in March. This weighs on consumer spending, while devaluing savings held in low return positions such as cash.
Watch the video above to learn about how the personal savings rate affects you and the wider economy. More

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This story is part of CNBC’s College Money Guide 2023, a series to help students and recent graduates understand their money and start their adult life off on a solid financial path.
A lot of students are unprepared for one major thing when they go off to college: how to manage their own money. But starting good money habits in college is crucial to setting yourself up for financial success in life. And that means setting up — and sticking to — a budget.

“Transitioning to college is a significant milestone for most young adults, as it marks the first time they are truly away from home and have the opportunity to make financial decisions on their own,” said Winnie Sun, managing director of Sun Group Wealth Partners in Irvine, California. “Hello, adulting!”
More from Personal Finance:Job hunting tips for the class of 2023This strategy could shave thousands off college costsHow to understand your financial aid offer
College students consistently cited money as the aspect of college life they felt least prepared to tackle, in a survey of more than 20,000 college students by Everfi. Just 33% answered that they felt prepared to manage their own money. And only about 40% said they had ever set up or used a budget.
Yet you need money for everything from buying your books to going out to eat. And if you took out student loans for thousands of dollars, those are contracts you signed, and many of those loans are going to start coming due about six months after graduation.
So, college is the time to set yourself up for success.

“It’s crucial to understand how money works and practice good financial habits,” said Sun, who is a member of CNBC’s Financial Advisor Council. “After all, money is the ‘tool’ that will help you move from where you are today to where you hope to be in the future, achieving your financial goals.”
Here are five key steps to setting up a budget.

1. Assess your numbers

The first step to getting a grip on your finances is to know your numbers.
Figure out:

How much money you have coming in every month.
What your fixed expenses (housing/rent, phone, tuition, books, etc.) are.
How much, on average, you spend extra per month (food, clothes, going out, etc.)
What’s left over (savings).

A lot of college students think — “Oh, I don’t have a lot of money, so I don’t need a budget.”
Not true!
That’s actually when you need a budget the most — so you can start building solid financial habits that will set you up for the rest of your life.
Whether you have a part-time job in college and are getting a regular paycheck, or you’re living off of a lump sum from financial aid, loans, gifts from birthdays or money you saved up from that summer job — you have money and you have to make sure it covers your living expenses, plus leaving a little padding for unexpected expenses like a flat tire, a busted laptop or an unexpected trip home for a family emergency.
You don’t think about these things because generally it was your parents’ responsibility to handle the budget and cover emergency expenses but now — that’s on you.

Saving money and having personal wealth isn’t just nice to have; it’s essential.

Winnie Sun
co-founder and managing director of Sun Group Wealth Partners

Certified financial planner Stacy Francis, founder of Francis Financial in New York and nonprofit financial literacy initiative Savvy Ladies, said one of things she sees college students get wrong about money all the time is that they behave like they have blinders on, focusing only on what’s in front of them — and not looking to the future.
Then, “when you do look up, you’re going to find yourself unable to pay your bills, your student loans, your credit-card debt and having to move back home with mom and dad until you do,” said Francis, who is also member of CNBC’s Financial Advisor Council. “I don’t know many college students that want to move back with Mom and Dad!”
So, bottom line: You need a budget.

2. Decide on a budget framework

Setting up a budget isn’t as hard or cumbersome as you think. It’s pretty easy — and it doesn’t have to take a long time.
I’m going to guess that most of us spend more time complaining about money than it would actually take to set up a budget to get more money.
We also spend a lot of time stressing about money and how we don’t have any (I see you, broke college student) but if you take a few minutes — say, the time it takes to watch a few TikTok videos — to set up your budget and learn a little bit about money, you can alleviate all that stress and instead, watch your money grow, which is very satisfying.
Satisfying or stressful? Seems like a no-brainer. But that is all up to you.
One popular formula for budgeting that Francis recommends is the 50-30-20 rule. That means 50% of your income goes to your basic living expenses, 30% goes to discretionary/fun stuff and the other 20% goes into savings or investments.
Generally, that means you start by putting the 20% away in a savings account like a high-yield savings account (right now, the top accounts are earning 4% to 5% interest, according to Bankrate) with the aim of not touching it unless you absolutely need it for an emergency expense. And, if you keep money in there and really try hard not to tap into it, you will be surprised at how it grows, thanks to something called compound interest.

Maybe $100 a month or 20% of your income sounds a little steep right now. Save whatever you can — $10, $20 a month. What’s important is that 1) you are saving money and 2) you are building a habit of saving money. Automate it, where it automatically comes out of your paycheck and into your savings account, and you will get to a point where you won’t even miss that money. But you will be pleasantly surprised when you see how it’s grown!
But you should always be working toward a goal of saving more. Up the amount you are automatically moving into savings whenever you can.
Most college students don’t have a lot of money, so you may wind up saving a little less than 20% some months or dipping into that account to pay an unexpected bill. But by having that money set aside, “it’s protecting you from having to dip into credit cards for those unexpected expenses,” Francis said.
Sun prefers more of a 50-25-25 rule — 50% for basic living expenses, 25% for fun stuff and 25% for savings.
“I think savings should be as much of a priority as wants,” Sun said. “Let’s face it, if the pandemic has taught us anything, it’s good to be prepared.”
And, she said she thinks it’s easier to think in quarters.
“And if it’s easier, we have a tendency to stick with it, making savings more sustainable,” Sun added. “When it comes to managing your money, the simpler you can make it, the better it’ll be for you.”

3. Figure out what tools work for you

Everyone agrees you need a budget but, as you can see, even financial advisors vary in how they think it’s best to budget and manage your money. So, no one is telling you that you have to do something a certain way — figure out what works for you.
There are a variety of ways you can keep track of your budget — you can use a budgeting app, set up a spreadsheet yourself or write it in a simple note on your phone. You can even go old school and write it down in a notebook. Or, you might want to try cash-stuffing, an all-cash budgeting method that has become popular on TikTok. Essentially, you convert your paycheck into cash and have a physical set of envelopes that you “stuff” for different expenses like your phone bill, rent, groceries, spending money, etc.
Everyone processes things differently so it’s important to figure out which tools work best for you.

Apps will help you track exactly where each dollar you earn is going and help you earmark different savings goals — like a vacation — and how much you’ll need to save each month to reach your goal. The nice thing is that they do the calculations for you. So, you plug in the numbers and then it’s a minimal lift on your part. Some will even let you track other accounts, like your 401(k) when you get that first job, or sync up with your partner’s accounts to track your household finances.
A few of the budgeting apps Francis recommends are Monarch Money, Mint.com and YNAB (You Need a Budget).
Sun says it’s OK if you prefer to track your expenses in a Google spreadsheet. Her team has also created a simple college budget worksheet you can download — MyBudgetWorksheet.com. Or, if that’s not your style to have to track every detail yourself, use your debit or credit cards to track your expenses and set up an alert to let you know when an expense goes through.
The bottom line: You have to be tracking what money is coming in — and where you’re spending it.

4. Schedule regular money check-ins

Once you figure out your method for tracking your budget, it’s important to schedule regular check-ins with yourself to make sure your spending is in check and you’re not spending more than you’re making — or that you’re not saving any for emergencies.
Maybe that’s once a week or once a month. Again, you have to find what works for you. If you struggle with keeping your spending in check, maybe make it weekly (at least at first) to really put those numbers in front of you and make any adjustments you have to before it gets out of hand.
Francis likens money check-ins to stepping on the scale when you’re on a diet. “I have a love-hate relationship with my scale, but what I will tell you about the scale is that it doesn’t lie,” she said. “It tells me exactly where I’m at so I can make better decisions.”
At the end of the day, it’s about making sure you are on track.

The Good Brigade | Digitalvision | Getty Images

Sun recommends taking a look at what you have left in your savings and reviewing your expenses during these money check-ins. Then ask yourself:

Are you surprised by how much money you have left?
Do you have any spending regrets?
Would you like to set a new spending, savings or earning goal for next month?

“Commit to spending less and saving more,” Sun said. “Shop online and do curbside or in-store pickup rather than going into stores, as this can prevent impulse shopping that can really wreak havoc on a limited budget. Get in and get out, and save more of your money.”
And, if you do overspend — don’t beat yourself up.
“No one is perfect!” Francis said. Instead, “look to the next month to see if there are some areas you might be able to cut down a little bit.”
The value of that weekly or monthly check-in with yourself is to get real about what you’re spending.
“Our brains are not powerful enough to keep track of every dollar we spend,” Francis said. “They’re just not.

“It’s not until you see the numbers tallied that you actually realize what you’ve spent,” she added. “The vast majority of us underestimate what we spend and we forget those one-offs.”
During these check-ins is also a good time to see if you are able to increase the amount you are putting into savings. Make that a regular part of your check-in — can I go from saving $20 a month to $25? And, if you take on any side hustles or odd jobs like babysitting or walking someone’s dog, try not to blow all of that money. Put some — or all — of it into savings. It was money you weren’t expecting anyway, right? Why not squirrel it away and let it grow? Then, maybe one day, the thing you were going to buy with it, you can buy with the interest you made on that money. And you still have the initial amount for something else!
It’s really all how you frame it. You can look at money as boring and something that “isn’t your thing.” Or, you can look at it as a way to have money for all the fun stuff you want now — and in the future.
I mean, why didn’t anyone tell me money could be fun?!

5. Try the buddy system

It’s easy to get caught up in the peer pressure — if your friends are going out and spending a lot of money, you want to go, too. You have to remember that they may have a bigger budget than you do. Or, they are blowing their budget and either don’t know or don’t care. Never make assumptions about people and their money. And don’t concern yourself with their money! That’s wasted energy. It would be so easy to complain about how other people have more money than you — or, you could get in there and start figuring out how to make — and save — money yourself.
You have to make your own decisions. So, let’s say you can’t afford to go out. That doesn’t mean you have to sit home and feel sorry for yourself that you’re poor. Do something else (that doesn’t break the budget). You don’t have to be rich to have fun!
One way to make it a little easier, Sun suggests, is to try the buddy system — just like you might do when you’re dieting or exercising. Get a friend who agrees to track their money along with you and you can compare notes. You can cheer each other on when you’re crushing it, have a sympathetic ear to turn to when you’ve overspent or got stuck with an emergency expense, and just generally discuss your questions about money, seek out the answers — and share what you’ve learned.
And, you don’t have to make it a boring business meeting. This is your meeting — you set the rules! So, maybe you discuss money over ice cream or plan to watch a movie afterward. Make it something you’re looking forward to. And, if you find you’re both crushing it, why not celebrate by treating yourself to something fun?

Blackcat | E+ | Getty Images

“With the confidence to discuss it, you’ll have people to go to with your money questions, and you’ll start to see money as a ‘tool’ rather than a social or status identity. This will help you identify ‘needs’ versus ‘wants’ and make decisions that benefit you and your finances,” Sun said. “For example, if you’re invited to a dinner, concert, event, or shopping trip that you really shouldn’t splurge on, you want to be comfortable enough to speak up and advocate for your financial priorities.”
We’ve all been there, where we can’t afford something that we want. That’s a bummer. But it’s even worse when you can’t afford something you need.
“Saving money and having personal wealth isn’t just nice to have; it’s essential. You need to be able to afford the things you need in life, and money, as a tool, can help you buy a car to get to a better job, move you into a more practical or safer neighborhood, pay for more education, and more,” Sun said. “Getting into that money-saving mindset takes practice. The earlier you start saving and investing, the harder your money can work for you.”
That is perhaps one of the most important money lessons of all for college students and new grads: The decisions you make about money now will set the foundation — the building blocks — for everything else you want to do in your life. You might say — Oh, I’ll worry about that later when I’m older. If you get yourself into debt now, “older” you will actually have a lot more to worry about. Let’s say older you wants to buy an apartment, get married, have kids or go on a vacation. They may not be able to — or they might have to delay those things — if you’ve saddled them with debt. On the flip side, if you are smart with money now, you will build a strong foundation so that you can do the fun things you want now and older you can do any of those things whenever they’re ready. No regrets.
See why we keep telling you that you need a budget now? It’s because we want you — and older you — to have the life you want.

Darreonna Davis, a student at Howard University who wrote about budgeting while you’re in college for CNBC’s “College Voices” series, said that before writing the story, she didn’t have a budget because she wasn’t sure where to start — or if she even needed to because she didn’t have a lot of money.
I’ll bet a lot of college students can relate to that! I know that is exactly how I felt when I was in college and even into my 20s.
“I learned that budgeting is essential to saving and, eventually, building your money. I learned that all the things it takes to start a budget are already at my fingertips, and it isn’t as hard as I thought!,” Davis wrote. “Believing that just because my income was limited and I had few expenses was a mistake on my part in my financial journey. Now, while in college, is the best time to begin practicing money management.”
Yes, Darreonna! So well said. And, by starting while you’re in college, it gives you a strong foundation to build on so that your money — and what you can afford to do today, tomorrow, next week or five years from now, keeps growing.
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Data shows that investment portfolios with lower annual fees ultimately offer investors the best value.
Many individuals have moved toward lower-cost investment options that have popped up in recent years.
Experts say that investors can be mindful of their expenses by reducing the frequency of their trading activities, which would lower overall transaction costs.

katleho Seisa | Getty

High fees can take a bite out of your portfolio returns, but the good news is that it’s becoming cheaper to invest.
Financial services firms charge clients a fee to invest their funds, typically withdrawn from their investment assets. When costs are high, they eat into returns over time.

Consider that over a 20-year period, an investment portfolio that’s generating a 4% annual return but assessed a 1% fee could lose nearly $30,000 more than a similar portfolio with a 0.25% annual fee, according to the U.S. Securities and Exchange Commission.
Indeed, costs are going down as asset management firms compete for clients’ dollars. Expense ratios on equity mutual funds averaged 1.04% in 1996, according to the Investment Company Institute. They tumbled to an average of 0.5% in 2020.
“In the retail fund market where products compete to be bought… costs have never been lower. Investors can get a globally diversified portfolio for less than 10 basis points, which is terrific,” Micah Hauptman, director of investor protection at the Consumer Federation of America, said. 
Why has it become cheaper to invest?
Some experts believe a major catalyst behind this trend is an increased awareness among individual investors, leading many to become more price conscious.
“Consumers have learned that costs are directly, or inversely, correlated to return,” Ron A. Rhoades, director of the personal financial planning program in Western Kentucky University, said. “Basically, higher fees and cost equals lower returns. A lot of academic evidence backs that up.”

Rhoades said the cost of investing has also fallen over time due to the rise of fiduciary investment advisors, who are required to act in their clients’ best interest and aim to keep expenses low, as well as online robo-advisors that offer financial services at a cheaper rate. 
“That’s put a lot of pressure on the asset management industry to come up with lower-cost solutions because that’s what investment advisors are requiring,” Rhoades said.
Increased competition, notably in the ETF market and between direct-sold mutual funds, has also contributed to lower investment costs, Hauptman said.
An additional catalyst toward the declining cost of investing, Rhodes added, are mandates from the Labor Department that went into effect more than a decade ago.
These rules require retirement plan service providers to disclose fees to plan sponsors and called for employers to issue fee disclosures to individuals participating in workplace retirement plans. This led savers to pay closer attention to costs, Rhoades said.
How investors can be mindful of their expenses 
Investors need to assess their fees in relation to the value they are receiving from their investments, Hauptman said. Most financial advisors charge clients based on how much money they manage for them, which is typically about 1% of assets. Some financial advisors may charge a flat fee or bill by the hour.
“It’s important for investors to not just look at one piece of the investing puzzle to the extent that they’re getting products and services,” Hauptman said. “They need to consider all of the costs that they’re paying, because all of the costs will ultimately erode their total returns over time.”
Sheryl Garrett, a certified financial planner and founder of the Garrett Planning Network, advised newer investors trading individual securities to do so minimally, and keep the rest of their investments “plain vanilla” in order to reduce the amount of recurring transaction costs.
Here are three steps to keep a lid on investment fees:
Check your expense ratios: Do some comparison shopping as you look through mutual funds and ETFs. Investment fees have come down considerably in the last couple of decades, but fund managers may charge more for eclectic offerings, such as strategies that focus on alternative investments.
Watch for other costs: If you’re investing through a brokerage account, keep an eye out for transaction fees, which can be very painful for the most active investors. Some firms also charge for broker-assisted trades. In a 401(k) plan, you could face costs in the form of administrative expenses – and those are in addition to the fund fees you pay.
Know how your financial advisor is paid: Ask up front whether your financial advisor is a fiduciary. Does your advisor charge based on assets under management, or does he offer a flat fee? Does he receive any commissions for products he recommends to you? Get these details in writing and be sure you understand them before you hire this professional.
Ultimately, the best investment is for individuals to become self-educated about their finances, Garrett said.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously. More

As Republicans push for a plan to address the nation’s debt ceiling, experts are warning a debt default could have big consequences.
That could interfere with the country’s ability to issue Social Security payments, Treasury Secretary Janet Yellen said this week.
Here’s what experts say could be at stake as the debt ceiling negotiations move forward.

Speaker of the House Kevin McCarthy, R-Calif., speaks to reporters in Statuary Hall in the U.S. Capitol after announcing his debt limit increase plan on the House floor on April 19, 2023.
Bill Clark | CQ-Roll Call, Inc. | Getty Images

As Republicans scramble to put together a plan to fix the nation’s debt limit, experts are warning a failure to address the issue could have dire consequences for Americans’ finances.
“In my assessment — and that of economists across the board — a default on our debt would produce an economic and financial catastrophe,” Treasury Secretary Janet Yellen said in a speech Tuesday in Sacramento, California.

Residents of the California capital could lose their jobs, she warned. Meanwhile, payments would go up on mortgages, auto loans and credit cards.
“On top of that, it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security,” Yellen said.
More from Personal Finance:GOP senator touts ‘big idea’ Social Security funding fixExperts argue Social Security retirement age should not pass 67The return on waiting to claim Social Security is ‘huge’
A default on the U.S. debt would be unprecedented, as the country has paid all its bills on time since 1789, Yellen noted.
The extraordinary nature of such an event has called into question how the government would juggle payments, including Social Security benefit checks.

The U.S. Department of the Treasury would likely prioritize the payment of Social Security benefit checks, Jason Fichtner, a former Social Security Administration executive and vice president and chief economist at the Bipartisan Policy Center, told CNBC.com in January.
However, it is possible the Social Security Administration would delay payments to ensure it has enough cash on hand, he said.

More broadly, the Bipartisan Policy Center is watching the “X date” range, the point by when leaders need to act to protect the economy.
The U.S. hit its statutory debt limit in January, prompting it to start paying the government’s obligations through extraordinary measures.
But it can only do that for so long. Yellen previously said it is unlikely the cash will be exhausted before early June. In February, the Congressional Budget Office said the emergency measures to prevent a debt default may be exhausted sometime between July and September.
The Bipartisan Policy Center is currently working on a new “X date” projection that would factor in delayed income from federal tax returns that have been deferred until October, according to Shai Akabas, director of economic policy at the center.

A default on our debt would produce an economic and financial catastrophe.

Janet Yellen
U.S. Secretary of the Treasury

Early June is a time period the Washington, D.C.-based think tank is watching, Akabas said.
“It may be that in order to minimize risk, Congress would need to act before that time frame,” Akabas said.
But while Social Security payments may still go out, others are worried about the ramifications the Republicans’ proposed spending plan could have on the Social Security Administration’s funding.
On Tuesday, the National Committee to Preserve Social Security and Medicare wrote a letter to Congress urging leaders to oppose the Limit, Save, Grow Act of 2023.

The bill calls for limiting fiscal year 2024 discretionary spending to 2022 levels, which would result in a 6% cut to all agencies for the year, according to Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
“The Social Security Administration (SSA) is a key agency that would be negatively impacted by such a dramatically reduced funding level,” Richtman wrote.
Such a funding cut would result in longer wait times for benefits and assistance, and could reduce access for in-person services, he said.
However, it is still too premature to know exactly the cuts the Social Security Administration or other agencies may face under the plan, according to Akabas. Notably, the Republican plan is far from a done deal, he noted.
“Even if that passes, it’s dead on arrival in the Senate, and the president has said that he would veto it,” Akabas said. “So there is no way that that is going to be enacted into law.”
However, now that House Republicans have put their opening offer down on paper, that may help open both sides of the aisle to a substantive discussion, he said. More

The Supreme Court’s decision on student loan forgiveness will be especially meaningful for borrowers who started college but never finished.
For them, managing education loans without the benefit of having higher earning potential is especially difficult.

Why more students are dropping out of college

Although college enrollment declines have leveled off overall, the number of students who started college but then withdrew rose 3.6% in the 2020-21 academic year, according to the National Center for Education Statistics. There are now more than 40 million students who are currently unenrolled.
“Growing numbers of stop-outs and fewer returning students have contributed to the broader enrollment declines in recent years,” said Doug Shapiro, executive director of the National Student Clearinghouse Research Center.
Among students who put their education on hold, most said it was due to a loss of motivation or a life change, according to a report by education lender Sallie Mae. Others cite financial concerns, followed by mental health challenges.

“There’s a variety of issues students face in college, many unexpected,” said Rick Castellano, a spokesperson for Sallie Mae. “In some cases, it could be an unpaid bill.”

Students with ‘some college’ more likely to default

If Biden’s plan to cancel $400 billion in student loans is blocked, default rates may spike, the U.S. Department of Education has warned.
But the borrowers most in jeopardy of defaulting are those who start college but never finish.
“If you are a student who has some college but no degree you didn’t realize the benefit of that education and it’s even more difficult to repay the loan,” Castellano said.
The default rate among borrowers who leave with student debt but no degree is three times higher than the rate for borrowers who have a diploma.  
If a student defaults, it’s not only a loss for them, but also for the institution of higher education and the federal government, Castellano added. “It’s a key moment for all of those stakeholders.”

Forgiveness ‘is really focused on the back end’

Meanwhile, college is only getting more expensive. Tuition and fees plus room and board, books and other expenses for a four-year private college averaged $57,570 in the 2022-23 academic year; at four-year, in-state public colleges, it was more than $27,940, according to the College Board, which tracks trends in college pricing and student aid.

Arrows pointing outwards

Next year, some colleges said they will hike tuition even more, citing inflation and other pressures.
Still, many would-be students believe that getting a degree is worth it and continue to borrow to make college possible.
“Regardless of where the Supreme Court lands, forgiveness as a solution is really focused on the back end,” Castellano said. “It could absolutely help, but how do we ensure we’re not back in the same place five years from now?”
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SAGECents is a free app, designed to boost financial literacy among older LGBTQ+ Americans.
It’s a partnership between SAGE, a national organization dedicated to improving the lives of older LGBTQ+ people, and LifeCents, a financial wellness platform.
“They’ve faced a lifetime of discrimination and social stigma, so they’re at higher risk to face poverty, homelessness and poor health outcomes than their peers,” said Christina DaCosta at SAGE.

Willie B. Thomas | DigitalVision | Getty Images

Financial stability is a concern for many older Americans, and challenges can be greater among marginalized groups such as elders in the LGBTQ+ community. But a free financial literacy app called SAGECents is looking to change that.
LGBTQ+ Americans are less likely to feel confident about having enough for a comfortable retirement, according to a 2022 survey from the Employee Benefit Research Institute.  

What’s worse, 1 in 5 older LGBTQ+ adults faced poverty during the Covid-19 pandemic, a 2023 study from the Williams Institute at UCLA’s School of Law found.   

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

“They’ve faced a lifetime of discrimination and social stigma,” said Christina DaCosta, chief experience officer at SAGE, a national organization dedicated to improving the lives of older LGBTQ+ people. “So they’re at higher risk to face poverty, homelessness and poor health outcomes than their peers.” 
Launched in 2020, SAGECents is a partnership between LifeCents, a financial wellness platform, and SAGE, with financial support from the Wells Fargo Foundation.
The app was developed based on survey feedback from the SAGE community, according to DaCosta. “We know that this is a population in need of support, especially financially,” she said.

How SAGECents works

The app uses a chatbot and gamification — where user interactions are akin to playing a video game — to address topics like budgeting, retirement savings, debt, credit scores and more, with prompts to automate savings or check credit reports, for example. The data isn’t sold to third parties or used to upsell products, according to SAGE.

“We learned so much from different members of the community,” DaCosta said. “And that allowed us to really tailor the app to reach the different micro audiences within the community.”

They’re at higher risk to face poverty, homelessness and poor health outcomes than their peers.

Christina DaCosta
Chief experience officer at SAGE

There are links to customized resources throughout the app, including guides on Medicare for the LGBTQ+ community, Social Security for same-sex couples, estate planning for transgender individuals and more.
SAGECents users also have access to one free session from a financial counselor with the Association for Financial Counseling and Planning Education designation.
Within its first two years, more than one-half of SAGECents’ 1,200-plus users reported reduced debt and improved credit scores, according to a news release from the organization.

Why LGBTQ+ elders face more challenges

Ilan Meyer, senior scholar of public policy at the Williams Institute at UCLA’s School of Law, who co-authored the recent report, said there are several reasons why older LGBTQ+ Americans may face greater financial difficulties than the general population.
Older LGBTQ+ Americans are more likely to be single and to live alone, making them less likely to benefit from a partner’s health insurance or other “social welfare structures,” he said.
“You also have greater potential for alienation from biological families, especially in the older generation,” Meyer said. “And they’re less likely to have children, which is certainly a huge source of support for older adults in the U.S..”

What’s more, LGBTQ+ Americans are less likely to work with a financial advisor, according to the EBRI survey.
“When you’re a member of a stigmatized group, you’re more likely to be apprehensive or suspicious of services,” said the Williams Institute’s Meyer. “I’m glad to hear SAGE is doing this because I think for some people it might be a trustworthy source.” More

Recessions over the last half a century have ranged from 18 months to just two months.
Federal Reserve economists believe the next downturn may stick around for longer than usual.

Suriyapong Thongsawang | Moment | Getty Images

How long economic recessions last

Yet the next slowdown may not leave so quickly.
Federal Reserve economists are predicting that there will be a mild recession later this year, “with a recovery over the subsequent two years,” according to the minutes of the Fed’s March 21-22 meeting.
Because the economists blame the recent turmoil in the banking industry for the impending economic trouble, they expect the pain to endure for longer than usual: “Historical recessions related to financial market problems tend to be more severe and persistent than average recessions,” staff noted in the minutes.
Indeed, the longest recession in recent decades was the 2008 financial crisis, which slogged on for 18 months.

Another tricky aspect to the current economic conditions is that the Federal Reserve is deliberately trying to slow economic growth in the hopes of getting inflation under control, said Preston Caldwell, the chief U.S. economist at Morningstar. Cutting rates usually helps the economy rebound from downturns.
Still, Caldwell expects that the central bank will tame inflation by the end of this year, and be able to start bringing rates down in 2024, at which point the economy would start its recovery.

Preparing for a downturn

If you are worried about a recession and possible job loss, Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California, recommends updating your resume so that you’re as prepared as possible to look for a new position should you need to.
Keeping in touch with a network of people in your field can also help you learn about open positions or even get a referral, said Curtis, who is a member of the CNBC Financial Advisor Council.
Having a solid emergency savings account, anywhere from three months to a year’s worth of expenses salted away, is one of the best safeguards to help ride out a downturn without having to go into debt, experts say. More

Choosing whether to rent or buy has never been a simple decision — and this ever-changing housing market isn’t making it any easier. With surging mortgage rates, record rents and home prices, a potential economic downturn and other lifestyle considerations, there’s so much to factor in.
“This is an extraordinarily unique market because of the pandemic and because there was such a run on housing so you have home prices very high, you also have rent prices very high,” said Diana Olick, senior climate and real estate correspondent for CNBC.

By the numbers, renting is often cheaper. On average across the 50 largest metro areas in the U.S., a typical renter pays about 40% less per month than a first-time homeowner, based on asking rents and monthly mortgage payments, according to Realtor.com.
In December 2022, it was more cost-effective to rent than buy in 45 of those metros, the real estate site found. That’s up from 30 markets the prior year.
How does that work out in terms of monthly costs? In the top 10 metro regions that favored renting, monthly starter homeownership costs were an average of $1,920 higher than rents.
But that has not proven to be the case for everyone.
Leland and Stephanie Jernigan recently purchased their first home in Cleveland for $285,000 — or about $100 per square foot. The family of seven will also have Leland’s mother, who has been fighting breast cancer, moving in with them.

By their calculations, this move — which expands their space threefold and allowing them to take care of Leland’s mother — will be saving them more than $700 per month.

‘You don’t buy a house based on the price of the house’

“You don’t buy a house based on the price of the house,” Olick said. “You buy it based on the monthly payment that’s going to be principal and interest and insurance and property taxes. If that calculation works for you and it’s not that much of your income, perhaps a third of your income, then it’s probably a good bet for you, especially if you expect to stay in that home for more than 10 years. You will build equity in the home over the long term, and renting a house is really just throwing money out.”
Mortgage rates dropped slightly in early March, due to the stress on the banking system from the recent bank failures. They are moving up again, although they are currently not as high as they were last fall. The average rate on a 30-year fixed-rate mortgage is 6.59% as of April — up from 3.3% around the same time in 2021.
But that hasn’t significantly dampened demand.
“As the markets kind of bubbled in certain parts of the country and other parts of the country priced out, we’ve seen a lot of investors coming in looking for affordable homes that they can buy and rent,” said Michael Azzam, a real estate agent and founder of The Azzam Group in Cleveland.
“We’re still seeing relatively high demand” he added. “Prices have still continued to appreciate even with interest rates where they’re at. And so we’re still seeing a pretty active market here.”

Buying a home is part of the American Dream

The Jernigans are achieving a big part of the American Dream. Buying a home is a life event that 74% of respondents in a 2022 Bankrate survey ranked as the highest gauge of prosperity — eclipsing even having a career, children or a college degree.
The purchase is also a full-circle moment for Leland, who grew up in East Cleveland, where his family was on government assistance.
“I came from a single-mother home who struggled to put food on the table and always wanted better for her children … it was more criminals than there were police … It is not the type of neighborhood that I wanted my children to grow up in,” said Jernigan.
The new homeowner also has his eye on building a brighter future for more children than just his own. Jernigan plans to purchase homes in his old neighborhood, renovate them and create a safe space for those growing up like he did.
“I’m here because someone saw me and saw the potential in me and gave me advice that helped me. … and I just want to pay it forward to someone else” Jernigan said.
Watch the video above to learn more. More