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The financial habits Americans struggle with most

(Jamie Grill/Getty Images)

The rules that financial pros say people should follow if they want to build wealth are usually straightforward — pay your bills on time, have cash on hand for a rainy day and invest money for your future.

Sounds easy enough, but for many people these milestones can feel out of reach.  The slow wage growth we’ve seen since the recession means that for many workers, there isn’t much left from the paycheck after covering essentials such as housing, child care and food. Then there are goals such as paying off debt and saving for retirement that can take a back seat, particularly for people struggling with student loans, day-care expenses and high rent.

A slew of surveys and economic reports released recently shed light on how well Americans are handling their money. Wondering where you stand? Take a look:

Debt payments. Consumers have become much better about paying their bills on time since the recession, with delinquencies for major loan types dropping nearly across the board. This is good news because, as Washington Post columnist Michelle Singletary has said again and again, one of the easiest ways to improve your credit score is to pay your bills on time. The share of closed-end loans, such as car and personal loans, that were late by 30 days or more dropped dramatically in the second quarter to 1.36 percent of accounts, far below the 15-year average of 2.27 percent, according to new data from the American Bankers Association. Closed-end loans are for a set amount, unlike credit cards or lines of credit, which allow balances to change from month to month.

Credit card delinquencies rose slightly to 2.52 percent in the second quarter but were still below the long-term average of 3.74 percent. And the share of people with federal student loans who failed to make loan payments within three years of leaving school is down as more people take advantage of flexible payment options. 

(Map: Harvard Joint Center for Housing Studies. Click here for an interactive version.)

The situation is a little different for people who own a home. For homeowners, monthly mortgage payments, including property taxes, mortgage insurance and home insurance, took up about 36.5 percent of the average national wage in the first quarter of 2015, down from 37.4 percent a year earlier, according to a report from RealtyTrac and Clear Capital.

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Emergency savings. If you have any savings, you’re ahead of the game. Some 62 percent of Americans have less than $1,000 in their savings account, according to a survey of 5,000 consumers by GoBankingRates. That includes 21 percent of those surveyed who said they didn’t even have a savings account. The findings are in line with a similar study by, which found that 29 percent of people don’t have an emergency fund.

Despite the steady job growth of recent years, many Americans are struggling to save. Financial advisers and economists blame low wage growth, which might make it difficult for families to keep up with rising rent costs and growing child-care expenses. Not surprisingly, people who make more money save a bigger percentage of their pay. People in the bottom 90 percent of the income scale save close to zero percent of their pay each year, while those in the top 10 percent save close to 15 percent of their pay, according to an analysis by Emmanuel Saez and Gabriel Zucman, economists with the University of California at Berkeley.

But it’s not too late to establish the habit. Financial advisers say people who save with a specific goal in mind — a vacation, a new car or to buy a home, for instance — may be more motivated to stick to their plan. Open a separate saving account and have the money funneled into the account automatically on a weekly or daily basis.

[Nearly 30 percent of Americans are one emergency away from financial ruin]

Retirement savings. People are getting better about saving for retirement. For the first time, the average amount that employees and employers contributed to 401(k)s topped $10,000 this year, according to Fidelity Investments. The numbers show that both sides are putting more funds toward retirement, an important shift as companies continue to move away from pensions and the future of Social Security remains uncertain.

But despite the improvement, many workers are still not saving enough. Many young workers are putting off saving until they’re older and making more money, a mistake that cuts down on how much time their savings have to grow and requires them to save much more later just to catch up.

Some workers who were automatically enrolled into retirement plans also make the mistake of thinking that the default contribution amount chosen by their employer — which is often as low as 3 percent — is enough. The average worker saves 8 percent of their pay in a 401(k) plan, according to Fidelity. But financial advisers say people should strive to save up to 10 percent of pay in their 20s, about 15 percent in their 30s, and make the maximum contribution, which is $18,000 this year for 401(k) plans, in their 40s.

If you aren’t there yet, increase your savings rate as much as you can now and then sign up to have your contributions increase automatically by one or two percentage points each year.

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