The end of the recession 2009 did not necessarily signal the end of financial hardship for many American families. The stubborn unemployment rate and ongoing foreclosure crisis has exacerbated the struggles for millions of households who have been forced to rely on credit cards to cover their living needs. However, many are finding solace in their circumstances by developing a money management plan to steer them in the right direction.
According to a new study conducted jointly by the Consumer Federation of America and the Certified Financial Planner Board of Standards, those who have a financial plan in place are more comfortable and confident than those who don't. The survey reveals that 38 percent of those surveyed live paycheck to paycheck, and less than 30 percent say they feel comfortable financially. Only 34 percent of respondents said they think they can retire at age 65. Despite the results, the study also reveals that those with an action plan in place tend to respond more positively to their future prospects than those who have not established a strategy for managing their finances.
With the exception of respondents who fall into the below $25,000 income bracket, 50 percent of individuals with a plan said they were on pace when it came to goals such as saving for retirement or putting aside funds for a rainy day. This compares to only 32 percent of consumers who gave the same answer but do not have a financial plan in place. Only 31 percent of respondents said they have a comprehensive financial plan that takes short- and long-term financial goals in account. Sixty-five percent said they follow a plan for at least one of their savings goals.
"Our survey clearly shows that having a personal financial plan helps both rich and poor achieve their financial goals," said Stephen Brobeck, CFA's executive director. "Having a financial plan increases one's confidence and effectiveness in managing, borrowing and saving money."
Consumers who are facing several different negative scenarios may not know which to prioritize over others, whether it be paying off credit card debt, building their retirement savings, starting an emergency fund or simply putting funds aside to cover specific goals. Enrolling in credit counseling, speaking with a financial professional and utilizing bank and lending educational resources can be a good place to begin developing a personalized plan.