| July 31, 2015

Research of the Week: How We Feel about Our Finances

We can get heated about our cold hard cash.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting studies

Three disparate surveys asked how Americans feel about different aspects of their financial well-being:

The big results

All three studies draw a similar conclusion: Americans are financially optimistic – even when they have little reason to be.

For example, the Principal study about summer fiscal fitness found, “over half of workers (52 percent) believe they are making good progress toward their long-term financial goals.” Yet there might be bliss in their ignorance: “Only three in 10 (31 percent) say they have created a budget.” Budgeting has long been shown to crucial to financial health – if done right.

The M.O.O.D. study found similar results. While 59 percent “expect their financial situation will improve in the next year,” they aren’t thinking much beyond that…

Despite good intentions, these positive attitudes alone are not translating into action-oriented behaviors. The data shows that only 1 in 5 Americans feel “very prepared” for retirement, protecting their wealth and handling income disruptions of varying durations.

Finally, Northwest Mutual discovered a disconnect when it asked working Americans about retirement. Most expect to work until age 68, and not because they want to. “It will be from necessity,” the study concludes.

Yet for workers already conceding they’ll need more money in their later years, they aren’t doing much about it…

Four in 10 adults state that they have not discussed retirement with anyone while a full third (35 percent) do not have any sense of how much income they will need to retire.  

The fascinating details

Americans have their priorities straight these days. Their top financial priority isn’t buying a new house or car. For 70 percent, it’s “being debt free.” Also on the list: “Paying their credit card bill in full each month (64 percent) and “putting money away for retirement” (62 percent).

Americans aren’t so go-get-‘em when it comes to retirement, however.  Northwest Mutual found defeatism: “Only 68 percent of future retirees expect to be happy in retirement compared to 80 percent of current retirees.”

Northwest Mutual concludes, somewhat understatedly, “This somewhat pessimistic outlook may stem from shortfalls in financial planning.”

The Principal survey found that more American workers were “happy with their current financial situation” when they work with a financial adviser (52 percent) than when they go it alone (31 percent). Of course, the Principal Financial Group offers financial planning, so no surprise there. This is a surprise to many folks: Financial planners can cost you up front or in commissions. Meanwhile, you can get free credit counseling and a free debt analysis simply by calling Consolidated Credit at .

What you can do

If it wasn’t obvious before, these studies show how emotion affects our finances – whether we’re overly optimistic or intentionally oblivious.

Just like medical conditions or child rearing, ignoring the problems don’t often make them go away. They just get worse. If you’re not ready to call for a free debt analysis, first review Consolidated Credit’s Financial Advice section. It was compiled by a certified credit counselor and offers simple step-by-step instructions for everything from saving to investing, with video and calculators to make a tough subject easy to understand.

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