Some people may thrive on instant gratification, but the majority of Americans believe long-term planning is more effective than immediate gains when it comes to their finances. A new study reveals that Americans are turning their backs on “get rich quick” schemes, and instead focusing on implementing positive measures that will allow them to reach a better financial position over time.
According to Northwestern Mutual’s 2013 Planning and Progress study, roughly 75 percent of individuals noted that long-term planning is more important and effective than focusing on short-term goals. Another third of respondents said cited the “slow and steady wins the race” mantra as their personal approach to managing their personal finances. The study also found that when it came to crucial financial planning goals – such as saving money, budgeting and paying down credit card debt – nearly all groups regardless of age recognized the importance of these actions.
For example, 40 percent of respondents 55 and older said saving early was the best decision they ever made, and 53 percent of those 25 to 54 agreed that putting money away earlier rather than later was the best choice they could make in the future. More younger adults – 52 percent – said ensuring their family’s protection was the second most important decision to make after savings, while older demographics placed this goal as last on their list. Instead, 40 percent of older individuals who are nearing retirement cited paying off their mortgage as the second most important task.
Developing long-term goals
Despite the results of the study, Greg Oberland, Northwestern Mutual executive vice president, said that actions speak louder than words and there are concerns that individuals may not be following up on their goals.
“People’s priorities are in place, but are their good intentions backed by demonstrable action?” asked Oberland. “On one hand, we’re seeing strong evidence that people are saving more. On the other, we know that half of all Americans have no long-term plan in place, and nearly a quarter are taking on more risk than they would prefer because they feel the need to play catch-up.”
Consumers can move closer toward long-term projects by focusing on small steps that should remain consistent over time. This may include putting 10 percent of each paycheck into a high-yield savings account each pay period, or paying more than the minimum on a high-interest credit card until the balance is paid in full. For help accomplishing goals, it can also be useful to work with a financial advisor or credit counselor to learn the tools and resources that can assist consumers in setting benchmarks and reaching their aims.