National Foundation for Credit Counseling
– Fifth Annual Financial Literacy Survey Results
The results of the NFCC’s fifth annual Financial Literacy Survey suggest that Americans may be shedding some of the more conservative spending habits they adopted during “The Great Recession” while still acknowledging that they may lack the know-how to make sound financial decisions. Whether it is due to the stubbornness of entrenched behaviors, the release of pent-up consumer demand, or other factors, Americans are spending more, saving less, and still carrying credit card debt. It is no wonder, then, that nearly half of Americans are concerned about having insufficient retirement and “rainy day” savings.
Reversing the trend witnessed over the past few years, a majority of adults now report that they are spending more or the same as they did one year ago. Further, more than half of adults do not maintain a budget or track their expenditures. All of this spending may explain the recent decline in the proportion of Americans who have non-retirement savings.
Credit card debt continues to present challenges for many Americans. Although two in three adults pay for most purchases with cash or debit cards, two in five still carry credit card balances from month to month.
Additionally, about the same proportion of Americans (two in five) would give themselves a grade of C, D or F for their understanding of personal finance, and nearly three in four feel they could benefit from the advice of a financial professional.
More than four in five Americans believe that certain circumstances would warrant defaulting on a mortgage, including having been misled about the terms of their loan or no longer being able to afford the monthly payment. Among homeowners carrying a mortgage, nearly three in ten report that the terms of their mortgage differed from their initial expectations. This combination of homeowners’ confusion surrounding their mortgage terms and Americans’ acceptance of defaulting on mortgages could wreak havoc on mortgage financing.
The Financial Literacy Survey is available on the NFCC’s Web site.
Sample survey area and question with responses:
Three in Four Americans Express Concerns about Financial Matters
Nearly 3 in 4 adults (73%) are currently concerned about some aspect of their finances. Almost half are worried about insufficient savings for retirement (48%) and/or emergencies (45%), and more than 1 in 4 (28%) are concerned about their ability to pay day-to-day living expenses, such as groceries and utilities. Additionally, 1 in 4 (25%) are concerned about their total debt, though only 1 in 10 are concerned about missing debt payments (10%) or receiving collection calls/letters (10%). Just over 1 in 4 Americans (27%) do not have any concerns about their financial situation.
Not surprisingly, adults with the lowest household incomes are much more inclined than higher earners to express concerns about various financial matters, as are adults with children living in their home. Additionally, African-American and Hispanic adults are significantly more likely than Caucasian adults to express concerns with assorted financial challenges, including the inability to pay for daily expenses or their mortgage, their poor credit rating, or receiving collection calls and letters. Conversely, older adults ages 65+ are significantly more likely than their younger counterparts to have none of these worries.
Which of the following, if any, are you currently concerned about when it comes to your financial situation? *
Base: Adults 18+ (n= 1,010)
Not having enough retirement savings
Not having enough “rainy day” or emergency savings
Paying day-to-day living expenses such as groceries and utilities
Your total amount of debt
Losing your job
Being able to consistently pay your mortgage
Your poor credit rating
Receiving collection calls and letters
Continually missing debt payments
None of these
*Multiple responses were allowed.