WHAT'S THE STATE of America’s family finances? The Federal Reserve just released its once-every-three-year look, in the guise of the 2022 Survey of Consumer Finances, which is based on in-depth interviews with some 4,600 families. You can read the Fed’s analysis here. Below are some key insights from the latest survey: Net worth. The typical (or “median”) net worth—meaning the value of all assets minus all debt for those American families halfway down the wealth spectrum—was $192,700 in 2022.  But the average (or “mean”) wealth, which measures America’s total net worth divided by all households, stood at $1,059,470. This is a classic example of skewness, with a small number of outliers—in this case, America's wealthiest families—skewing the results higher. Indeed, for those in the bottom 25%, the typical net worth is $3,500, versus $3.8 million for families among the top 10%. The two most widely held assets were bank and other “transaction” accounts, held by 98.6% of families, and cars and other vehicles, at 86.6%. Income. Skewness also shows up in pretax family income. As of the latest survey, the typical household income was $70,260, while the average was twice as high, at $141,390. Stocks. As of 2022, 58% of U.S. families were invested in the stock market, up from 48.9% nine years earlier. Direct stock ownership—as opposed to ownership through, say, mutual funds or retirement plans—had been trending lower in recent decades. But it jumped to 21% of families in 2022, from 15.2% in 2019, no doubt driven in part by the proliferation of trading apps and by the introduction of zero-commission stock trades by discount brokers. The jump in direct stock ownership shows up across all age groups, except those 75 and older. Real estate. The Fed's survey found that 66% of American families owned their primary residence, up from 63.7% six years earlier, but below the peak of 69% in 2004. Among homeowners, 63.9% had some sort of home loan. The median home equity—home value minus home loans—soared to $201,000 in 2022 from $139,100 in 2019. Retirement accounts. Among all families, 54.4% have a retirement account. Even in the age group where retirement accounts are most widespread—those ages 45 to 54—they’re held by just 62.2% of households. Those ages 65 to 74 had median retirement account balances of $200,000, enough to generate $670 in monthly income, assuming a 4% withdrawal rate. Credit cards. Despite all the handwringing, credit card balances in inflation-adjusted terms are at their lowest levels since the 1990s. In 2022, 45.2% of families had card debt, down marginally from 2019, with a typical balance of $2,700 and an average balance of $6,120. Credit card debt is the most common form of debt, ahead of home loans, which 42.2% of families have, and car loans at 34.7%. Overall, 77.4% of families have some form of debt. Education loans. Roughly a fifth of families have student loans, with a typical balance of $24,500 and an average balance of $46,980. These figures are little changed from three years earlier.

DON'T ASSUME YOUR PATH up the mountain is one that everybody else should also follow. I don’t budget, I earmark 80% of my retirement savings for stocks and I'm currently well above that level, I don’t have a separate emergency fund, I expect to live comfortably in retirement on half of what I currently earn, I plan to delay Social Security until age 70 and my stock market money is entirely in index funds, with roughly half allocated to foreign shares. Should you blindly mimic what I do? Absolutely not. It’s called personal finance for a reason: Everyone’s approach to managing money should reflect their personal goals, circumstances and emotional makeup. Yes, it’s interesting to get a glimpse into the financial life of others—a glimpse that’s regularly offered by HumbleDollar’s articles and by readers’ comments. Those glimpses give us a chance to reassess what we do and why, and we might pick up some useful ideas that’ll help us to better manage our money. But make no mistake: When it comes to handling money, nobody has a monopoly on truth. Yes, logic and evidence favor certain courses of action, such as buying stocks if you have a long time horizon, holding down investment costs, diversifying, indexing, saving diligently, insuring against big financial risks and so on. But in the end, each of us has to tailor such advice to our individual financial life. That’s why I grow concerned whenever I see folks insisting that their approach is not just right for them, but right for everybody else. Where does that unwavering conviction come from? Often, it seems to rest on one or more of the following six arguments: 1. “You should do this—because it’s what I did.” I see this phenomenon all the time. Those who claimed Social Security early insist it’s wrong to delay—and those who claimed late believe it’s wrong to claim early. Ditto for those who do or don’t budget, or do or don’t own individual stocks, or do or don’t have long-term-care insurance. I view this as a form of anchoring. Many folks find it hard to set aside what they’ve done or currently do, and imagine that a different path might work just fine for others. I don’t budget and never have. But if others find it useful or comforting, what’s the harm? I avoid actively managed funds and individual stocks. But if others actively manage their portfolio, their returns are okay and it makes them more tenacious investors, who am I to object? Want to know what really impresses me? When I read about folks who took one course of action—and now concede they were wrong. It’s easy to protect our psyche by pounding our chest and proclaiming we’re right. It’s much harder to humbly concede our error. 2. “It worked well for me.” I’ve never had a separate emergency fund. Early on, sitting on a big pile of cash simply didn’t seem like a possibility when I was raising a family on a junior reporter’s salary, while trying to save for retirement, the kids’ college and a house down payment. As it turns out, my nonexistent emergency fund was never a problem. But that doesn’t mean it was prudent. It means I was lucky. To use the term popularized by professional poker player and author Annie Duke, we shouldn’t engage in “resulting”—imagining a decision was good simply because it turned out well. Today, I still don’t have a separate emergency fund. But at this juncture, I think that’s just fine. I have ample money in my retirement portfolio and could easily use some of those dollars to cover an emergency expense without imperiling my financial future, so I see no need to keep a separate stash of rainy-day money. But that doesn’t mean my failure to have an emergency fund in my 20s and 30s was a smart strategy. 3. “I heard this incredible story.” I think the case for indexing is unassailable. But if your goal is to appeal to the heart not the head, you’ll likely fare far better by sharing that anecdote about your neighbors, who claim to have beaten the stock market averages every year with ease. [xyz-ihs snippet="Mobile-Subscribe"] Make no mistake: Stories are more powerful than logic or statistics. But I would also encourage you to be skeptical of the stories you hear. Take those market-beating neighbors. Are they including all their investments in their calculation, or are they conveniently ignoring the duds that they’ve since sold? How much risk did they take? What benchmark are they comparing themselves to? Are they counting the savings they added to their nest egg as part of their portfolio’s gain? Have they even made a calculation and have they done it properly—or do they simply believe they’ve beaten the market because their wealth has grown over time? 4. “But what if that idiot wins the next election?” I’ve heard of folks who bailed out of stocks because Barack Obama won the presidency—and others who fled stocks because Donald Trump was elected. More recently, investors are getting hot and bothered over whether a money manager does or doesn’t use environmental, social and governance criteria. I’m skeptical of any financial advice that comes with the taint of heated political rhetoric. I think our political views should play almost no role in the investments we own. One exception: Over the years, I’ve grown sympathetic with those who avoid investing in countries with authoritarian regimes, notably China, where property rights are far less secure. 5. “Everybody's doing it.” We’re social creatures whose spending and investing is heavily influenced by others, including our parents, neighbors, colleagues and—increasingly these days—those we follow on social media. Indeed, the internet in general, and social media in particular, seem to be megaphones that promote all kinds of dubious information and bad behavior. How many people have made financial decisions in recent years that they now regret because of the online frenzy generated over meme stocks, cryptocurrencies, special purpose acquisition companies, real estate and even Series I savings bonds? 6. “Trust me, I’m successful.” Sure, you’ve led a life marked by career accomplishments. But that doesn’t automatically make you a whiz at managing money. Think of this as the “doctor phenomenon.” Just because you can save lives—or started a successful small business or became CEO—doesn’t mean you can pick the next hot stock or know which way the financial markets are headed. Yet such folks often have abundant, unjustified confidence in their own investment abilities. Worse still, others often hang on their financial pronouncements. This is not a good idea. I once had the chance to view the feverish trading activity of a retired CEO. It was almost as if his goal was to violate the wash-sale rule. The number of buys and sells was impressive. The results weren’t. Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles. [xyz-ihs snippet="Donate"]

READERS HAVE PERUSED almost 18 million HumbleDollar pages over the past six years. Many of those pageviews were garnered by the homepage, the latest articles page and the main money guide page. But what about the site's articles? Below are the 30 best-read pieces since the site's launch on Dec. 31, 2016. If the list seems a little eclectic, there's a good reason: Many of the articles that have enjoyed big traffic over the past six years have been those that got promoted by far larger sites. What about the site's No. 1 article? It's regularly used in high schools around the country.  Terms of the Trade (2019) by Jim Wasserman Nobody Told Me (2020) by Jonathan Clements Farewell Money (2019) by Richard Quinn He Gets, She Gets (2020) by James McGlynn Don't Delay (2020) by Dennis Friedman 12 Investment Sins (2020) by John Lim Home Rich Cash Poor (2022) by Mike Drak The Taxman Cometh (2020) by James McGlynn Choosing Happiness (2022) by Jonathan Clements An F in Retirement (2021) by Mike Drak 11 Retirement Changes (2022) by Greg Spears How to Use I Bonds (2022) by John Lim Skimping on Cash (2021) by Jonathan Clements Still Learning (2019) by Richard Quinn This Too Shall Pass (2020) by Richard Connor My Four Goals (2020) by Jonathan Clements 27 Things to Do Now (2020) by Jonathan Clements Don't Get an F (2019) by James McGlynn Price Protection (2021) by John Lim Enough Already (2017) by Jonathan Clements Farewell Yield (2020) by Jonathan Clements The Bogle Method (2021) by Jonathan Clements Flunking the Test (2020) by Richard Connor Ten Commandments (2018) by Richard Quinn The Tipping Point (2018) by Jonathan Clements The Humble Landlord (2022) by Steve Abramowitz Ten Years Retired (2020) by Richard Quinn When Cash Is King (2021) by William Bernstein 45 Steps to Success (2019) by Jonathan Clements Unanswered (2018) by Jonathan Clements

IS IT POSSIBLE TO have too much money? This falls firmly into the “nice problems to have” category. Still, imagine you’re the lucky recipient of a winning Powerball ticket or a rich aunt’s bequest. You might find yourself grappling with three threats to your happiness. First, you could quickly get used to the finest things in life, with no prospect of ever enjoying anything better. If you’re occasionally upgraded to first class, it’s a treat, because you can easily recall the indignities of economy. But if you always fly first class, you’ll take it for granted and it won’t seem special. Gone from your life will be the pleasure of an improving standard of living. That brings us to a second, related problem: Because you could afford pretty much anything your heart desires, each item you possess will likely have less perceived value. Let’s say you own a single piece of art. Each day, you might catch a glimpse and feel a surge of appreciation. But if you have fine art on every wall, each painting will receive only a sliver of your attention, if you notice them at all—and the abundance may downgrade the joy you receive from the entire collection. Admittedly, modest pleasure from lots of art could be worth more than great pleasure from one or two pieces, but I wouldn't bank on it. Third, all that money will give you endless choice. But too much choice could leave you with a gnawing sense of uncertainty. Am I squandering the financial freedom that I have? Would I be happier if I were doing something else? As you wrestle with these questions, you may discover that instead of enjoying life, you’re agonizing over how best to live it. Follow Jonathan on Twitter @ClementsMoney and on Facebook.  [xyz-ihs snippet="Donate"]

THE FEDERAL TAX system punishes the middle class, who have earned income and fund retirement accounts. Meanwhile, it favors the wealthy, who are more likely to have substantial sums in taxable accounts and then bequeath those assets. Okay, now I need to explain myself. First, there’s the question of earned versus unearned income. Tax rates on wages are higher than those on long-term capital gains and qualified dividends, plus workers also have to pay Social Security payroll taxes. The latter is especially rough on the self-employed, who have to pay the full 15.3% payroll tax, because they don’t have an employer to pay the other half. Defenders of the current system will say that we need lower tax rates on investments to encourage folks to save and invest for the long haul, and that those who pay Social Security taxes are eventually rewarded with retirement benefits. But along the way, aren’t we discouraging people from working, a bad idea in an economy where the ratio of workers to retirees is shrinking? On $100,000 in income, a single self-employed individual might lose more than 30% of his or her income to federal income and payroll taxes, or quadruple the 8% paid by someone who lives off qualified dividends and long-term capital gains. Second, there’s the issue of what gets taxed after your death. In 2015, if you die with less than $5.43 million ($10.86 million if a couple) in a taxable account, you’ll owe no federal taxes. But if you died with a comparable sum in a traditional retirement account, your heirs would owe a massive amount of income taxes. There’s even talk of forcing heirs to empty retirement accounts within five years of the original owner’s death, which would make the tax bill especially massive. (In 2019, this came to pass, though most beneficiaries were given 10 years to empty inherited retirement accounts.) Again, defenders of the current system would argue that the traditional retirement-account dollars have never been taxed, so the federal government should still get its money. But arguably, that’s also true of the embedded capital gains in a taxable account, and yet those capital-gains tax bills disappear upon death, thanks to the step-up in cost basis that occurs. As you can tell, I’m well aware of the rationale behind the current system. And while perhaps the current system shouldn’t be scrapped, it seems like we need to tweak the incentives somewhat—so that people have a greater incentive not only to work and to launch their own businesses, but also to save in retirement accounts both for their own benefit and with their heirs in mind. [xyz-ihs snippet="Donate"]

WALL STREET’S inhabitants have many unpleasant qualities: greed, arrogance, disdain for customers, inflated self-importance, a sense of entitlement. But all this is made worse by another unappealing trait: They’re so damn prickly. The degree of prickliness is closely correlated with the outrageousness of the fees they charge. I saw this again and again during my decades as a financial journalist. I can’t recall an index-fund manager ever throwing a king-size snit, and it was rare that I got a nasty letter or email from a fee-only financial planner. Instead, this sort of behavior seems to be the preserve of those who make a living stuffing high-cost dreck down the throats of everyday Americans. Exhibit A: sellers of variable and equity-indexed annuities. Say something nasty about these products and your inbox will likely be filled with vicious messages. Annuity salesmen appear to be emboldened—rather than embarrassed—by the huge commissions they collect, and view themselves as misunderstood victims of an unappreciative world. Sort of like teenagers. Next on the snit list are sellers of cash-value life insurance, another group collecting commissions that would make even used car salesmen blush. Arguing with these folks is an exercise in frustration. Mention the high commissions and you’ll be told about the dividends. Pick holes in the need for lifetime insurance coverage and you’ll hear about the loan feature. Discuss the high lapse rate and you’ll be told about the tax-free death benefit. And so it goes on. A little further down the snit list are stockbrokers who sell load mutual funds that can charge an initial sales commission of as much as 5.75%. In the late 1980s and early 1990s, I remember hearing all kinds of drivel from these folks—about how load funds outperform no-load funds (not true), how the commission creates an incentive for the fund’s manager to work harder (not true), how index funds are guaranteed mediocrity (not true). Today, you’re less likely to hear this nonsense, in part because many stockbrokers are trying to kick the commission habit. Instead, they’re focused on getting clients to open fee-based advisory accounts that (irony alert) hold no-load mutual funds and exchange-traded index funds. [xyz-ihs snippet="Donate"]