The Sad State of American Finances
| May 19, 2009 | Posted by Roshawn Watson under Uncategorized |
By: Roshawn Watson
Harris Interactive recently released the 2009 Consumer Financial Literacy Survey. This survey sampled 1000 Americans over 18 years old between March 13-16. Their results demonstrate that most Americans have considerable financial deficiencies. Here are their revealing findings…
Financial Literacy
- 41% of U.S. adults gave themselves a grade of C, D, or F on their knowledge of personal finance.
Budgeting
- Less than half of adults keep close track of their spending, and several had no idea of food, housing, entertainment, and do not monitor their overall spending.
- I would argue that much fewer people rigorously budget than this study indicates.
Spending
- 57% of adults spend less than they were a year ago although 45% of those now spending less admit that if their financial situation were to improve, they would resume their previous spending habits.
Savings
- one-third of adults report having no savings, and only 23% save more than they did a year ago.
- 48% Generation Y adults have no savings.
- Not surprisingly, 55% say that they would borrow in the case of emergency.
Debt and Credit Card
- 26% admit to not paying all bills on time, and this rises to 51% of African Americans.
- 6% carry debt load of 10,000 or more and the same percentage have debts in collection and are now considering bankruptcy.
- I definitely believe this is underestimated as well.
Credit Score
- 64% have not ordered a copy of their credit report despite it being free, and this rises to 72% for Hispanics.
- 37% do not know what their credit score is.
Housing
- 42% of adults have a mortgage, and a little over one-fourth (28%) say that their mortgage terms turned out differently from their expectation.
Retirement
- One-third of adults put no part of their annual household income towards retirement.
Insurance
- 13% of adults have no medical insurance, and 65% of elderly adults have no long-term care insurance.
We have to do better, regardless of our income. Even a household making $40,000 per year will bring in over $2 million over the typical life-time, and to be financially inept is just irresponsible, especially now that we’re in the midst of a global financial mess. If anything, this survey is probably underestimating our financial dysfunction, since it relies on participants to self-report somewhat embarrassing (or at least non-flattering) details of their finances. However, these results will hopefully serve as our wake-up call. Otherwise, we have not learned the lessons that got us in this financial mess in the first place, which would be the true tragedy.
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Image Credit: Mario
I do think this survey is a sad commentary on American finances. I hate to say it, but I don't feel that I should be forced to finance the ignorant masses with my tax money.
These are some seriously bad stats.
Great comments. These stats demonstrate how easily we can fall off the financial cliff: the masses are broke and ignorant. It's definitely irresponsible Mark, as your comment suggests!