How Well Do You Know Your Finances?

Promoting more familiarity with employer benefits and financial details.

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

The interesting study

Employer benefits are designed to provide essential support for your financial stability. Beyond your basic paycheck, the benefits you receive through your employer can have a significant impact on your ability to maintain financial stability, from healthcare and retirement benefits to even basic tools like personal financial management assistance.

 

The benefits experts at MassMutual recently released a report detailing how 1,517 adults in the U.S. felt about their benefits and the place finance holds in their lives, in general.

The big result

People place more importance on financial issues than many experts usually give them credit for. Understanding personal finance and having knowledge of financial accounts were very important to most of the survey takers. They had equal importance to making sure the family was healthy and had adequate health insurance.

The fascinating details

Encouragingly, the respondents reported they knew more about financial matters like bank and credit account information and employer benefits than who is running for President in 2016 or what’s happening in the “Call Me Caitlyn” story.

Of course, not all the news was as good. So while 95% of respondents knew their current savings account balance and 91% knew their credit card balances…

  • 19% were unaware exactly how much they were currently spending on employer-based benefits out of every paycheck.
  • 22% didn’t know which benefits to prioritize over other benefits
  • 41% didn’t know how much life insurance they should have
  • 42% didn’t know if they were on track to retire comfortably
  • 49% weren’t aware of exactly how much they should be spending on benefits

Even more concerning, over one in five respondents wasn’t interested in learning more about their finances because, “I know everything I need to know about my finances.”

What you can do

“It’s interesting to hear so many respondents to a survey like this felt they knew everything they needed to know about finance to be successful,” says Gary Herman, President of Consolidated Credit. “Even certified financial professionals and CPAs don’t know everything there is to know about finance – there is always more to be learned to improve your situation.”

Essentially, it’s the difference between knowing enough and knowing everything. While you may know enough to maintain stability with the financial outlook you currently have, you could learn more to improve your outlook and build wealth that protects you long-term.

“Knowing your bank and savings account balances, the APR on your credit cards, how much debt you have, and how much of each paycheck is going into your 401(k) is necessary, but it’s not everything you need to know to be successful,” Herman continues. “It’s a solid foundation, but you need to build on it.”

Think you know everything you need to know about finance? Consider these questions to help you identify places where you may want to build knowledge or explore ways to improve your situation:

  1. How is the money you contribute to your 401(k) and/or IRA being divided up between different mutual fund options and how do mutual funds really work?
  2. Does your employer offer a 401(k) contribution match program and if so, how much will they match?
  3. What’s the APY on your savings account? How much does your account grow each year?
  4. If you have kids, what’s the best college savings option you should be using to invest in their education?
  5. What’s your federal income tax withholding and is it set correctly to avoid giving too much money to the IRS out of every paycheck?
  6. What’s a better investment if you want a low-risk investment option – a CD or a stock option?
  7. How should you choose stocks when you invest and how often should you cash out stock options?
  8. How much equity do you currently have in your home?
  9. Are you eligible for refinancing your mortgage under the Home Affordable Refinance Program?
  10. How much money would it take to pay off a point on your mortgage to reduce the applied interest rate even if you can’t refinance?