Personal Finance 101 Goes Viral

- A six-month cash reserve is often recommended to cover essential expenses like housing, transportation, and groceries in case of unexpected events such as a job loss or medical emergency. For single-income families or those with variable incomes, a larger reserve of six months or more may be advisable. - While some financial experts suggest a debt-to-income (DTI) ratio of 35% or less is good, many lenders have a maximum DTI of 43% to qualify for a mortgage. A DTI of 50% or more may limit your borrowing options as it suggests that a large portion of your income is already committed to debt payments. - The U.S. personal savings rate was 3.6% in December 2025, which is lower than the long-term average of 8.39%. This is also a significant decrease from the average of 11.7% seen in the 1960s and 70s. - As of the fourth quarter of 2025, total U.S. household debt reached a record $18.8 trillion. This includes debt from mortgages, credit cards, auto loans, and student loans. - Financial literacy in the U.S. remains low, with adults on average correctly answering only 49% of personal finance questions in a 2025 survey. Understanding financial risk is a particular area of weakness, with only 36% of related questions answered correctly. - Prioritizing high-interest debt, such as credit card balances, is often recommended before investing because the interest paid on the debt is likely to be higher than the returns earned from investments. - In Kenya, the National Social Security Fund (NSSF) is a mandatory savings scheme for all workers. However, with an income replacement ratio below 40%, compared to the recommended 75%, relying solely on NSSF may not be enough for a comfortable retirement. - Globally, only one-third of adults are considered financially literate, meaning they understand basic financial concepts like interest rates, inflation, and risk diversification. There is also a gender gap, with 35% of men being financially literate compared to 30% of women worldwide.