While a large majority of Americans say they live comfortably or close to it, in the past year the number that worry about their personal finances has increased, especially among the young and the least affluent, according to a recent national survey commissioned by the Consumer Federation of America (CFA) and Financial Planning Association (FPA).
“Growing concern about the economy and diminished concern about terrorism may well have increased the number of Americans worrying about their personal incomes and savings,” said Stephen Brobeck, CFA Executive Director. “Young adults and those with lower-incomes are the groups most likely to experience not only financial anxiety but also significant increases in this anxiety,” he added.
The survey, conducted by the Opinion Research Corporation International in late April, also revealed that less than one-half of Americans have developed a financial plan. However, the survey also revealed that nearly all believe having such a plan is important, and large numbers think it important to either update their current financial plan or create one.
“Over the past decade, financial planning has grown in importance for individuals and families,” said David Yeske, FPA President. “We are encouraged that most Americans recognize the importance of financial planning,” he added.
Through America Saves, a national initiative to help individuals and families with low savings build wealth, CFA and FPA are offering free advice about developing a plan. Those who enroll as American Savers qualify for free financial advice from certified financial planners who belong to FPA. Information about free enrollment can be found on the America Saves website (www.AmericaSaves.org) and on the campaign’s “Build Wealth Not Debt” pamphlet (send a stamped, self-addressed envelope to American Saves, P.O. Box 12099, Washington, DC 20005-0999).
Most Americans Say They Live Comfortably or Close to It
Nearly three-quarters of Americans say they live comfortably or close to it. Thirty-nine percent say they “live comfortably” while another 33 percent say they “meet their expenses with a little left over for extras.” Only 8 percent say they “don’t have enough to meet expenses.”
Even larger majorities (well over 80 percent) say that they are not “extremely” or “very worried” about the adequacy and security of their incomes, the adequacy of their savings, and the amount of their consumer debt. And, over half say they are “not very” or “not at all” worried personally about these financial factors — 57 percent for security of income, 56 percent for adequacy of income, 53 percent for adequacy of savings, and 62 percent for the amount of consumer debt.
But Increasing Numbers of Americans Worry about their Personal Finances
From February 2002 to April 2003, the percentage of Americans extremely or very worried about personal finances increased — from 7 to 12 percent for adequacy of income, from 8 to 14 percent for security of income, from 13 to 16 percent for adequacy of savings, and from 6 to 10 percent for amount of consumer debt.
Most striking were increasing concerns among young adults and those with low- or moderate-incomes. Those aged 18-24 experienced growing anxiety about adequacy of income (from 5 to 21 percent), security of income (from 10 to 27 percent), and adequacy of savings (from 14 to 21 percent). Lower-income Americans experienced especially large increases in anxiety about adequacy of income — from 14 to 23 percent for those with annual incomes under $15,000, and from 6 to 18 percent for those with annual incomes of $15,000-25,000. And, those with annual incomes of $15,000-25,000 experienced especially large increases in anxiety about adequacy of savings — from 14 to 23 percent.
By contrast, far fewer older and affluent Americans experienced this anxiety. Less than 10 percent of those over the age of 65 and those with incomes over $50,000 said that they were extremely or very worried about security of income, adequacy of income, and adequacy of savings, with one exception — 11 percent of the affluent worried about adequacy of savings.
For the young and the least affluent, concern about the amount of consumer debt did not increase.
Most Americans Have Not Developed a Financial Plan But Intend To
The survey showed that a large majority of Americans consider financial planning to be important. Eighty-six percent said this planning was important to them personally, and 52 percent said it was “very important” to them. One group that especially valued financial planning was adults aged 25-34, with 67 percent of this group saying financial planning was very important.
However, the survey also revealed that most Americans have not developed a financial plan, that is, a comprehensive look at their goals with a plan to address how to reach them. Only 46 percent said they had developed such a plan with the young (32 percent) and the poor (22 percent) being the least likely to have done so.
Those who have not developed a personal financial plan have not done so for fairly predictable reasons: the poor are most likely to say they “don’t have enough money to make it worthwhile”; the young are most likely to say they “haven’t gotten around to it though want to”; and the elderly are most likely to say “they don’t think they need one.”
What is hopeful is that a significant minority (28 percent) of those without a plan say they intend to prepare one in the coming year. Even more significantly, a large majority (78%) of those with a plan consider it important to update this plan.
American Saves Campaign Emphasizes Personal Financial Planning
America Saves is a national campaign, initiated and managed by CFA, that seeks to encourage and assist non-savers to build personal wealth through home ownership, retirement accounts, personal savings, and other strategies. Those who wish to enroll as American Savers must select a savings goal and develop a specific plan, which includes monthly dollar deposits, to achieve this goal.
The Financial Planning Association assists America Saves nationally by making available volunteer financial planners to provide information and advice to American Savers. These planners are prepared to answer questions about a broad array of issues — from budgeting and debt management; to stocks, bonds, and annuities; to insurance, employee benefits, and tax planning; to retirement and estate planning.
Local Saves campaigns have been launched in Cleveland, Kansas City, Indianapolis, Charlotte, Gadsen County (FL), Northern Wisconsin, Philadelphia, Milwaukee, and Columbus (GA), and are being organized in several dozen other communities around the country and as far west as Guam. The campaign is also enrolling savers nationally through America Saves and through Black America Saves, which is promoted mainly through the BET.com website. To date, nearly 10,000 Savers have enrolled, more than 400,000 persons have requested the “Build Wealth Not Debt” pamphlet, and nearly 1 million have accessed the American Saves website (with many millions of hits).