Majority Of Americans Lack Financial Management Skills, Research Shows

The world over admires Americans for their self-confidence and infrastructural development. However, Americans are not perfect beings without flaws, and one of their flaws is a deficiency in financial management, they don’t know how to handle their money or even aware of what financial management means in the first place. Recent research was conducted on 1,000 participants who were above thirty years old and of American origin. The results obtained showed that the percentage of those who can accurately define 401(k) was below 50% of all the people used for the survey.

The purpose of the research, which was organized by Guidevine (an organization that pair people with economic counselors), was to find out the level of familiarity people have with financial vocabularies. Unfortunately, the survey met with disappointing outcomes as the participants found it difficult to explain the word ‘interest,’ as the correct answers were barely 49%, accurate people who did fairly well with the explanation of inflation and its rubrics were 34% while whole meaning and factors of bankruptcy were 48%.

GuideVine disclosed that more than half (56 %) of the respondents who took part in the poll were confused on what a lasting and sustainable financial plan entails. Out of all the 1,000 participants, only 15% already put a 5-year future strategy for their money, while about 32 percent of them admitted that their present income and expenditure give them the opportunity to wisely device a reliable financial program. Just 13 percent of the 1,000 studied had a 5-year plan for their finances.

Indeed, such people with that mindset usually have negative predictions for their future and financial lives, because many of these 30s and above respondents (about 28%) don’t think a house of their own will be realistic to plan for since it’s not likely they will have one. Sadly, some of them (around 33%) had already resigned to the fate which has subjected them to permanent borrowing and debt, while an almost percentage of 36% also believed that when an easy retirement is being mentioned, they won’t be lucky to have a part in that luck.

Commenting on this summation of the study, the CEO of Guidevine, Raghav Sharma, explained that although this is disturbing, yet it’s not a surprise to him. He said that GuideVine has consistently offered standard economic counsels to thousands of Americans who need to get the most dependable financial tools, but the worst obstacle in this process has always been inadequate financial knowledge and lack of confidence. Many clients don’t have sufficient exposure to money and how even to start the journey of economic management.

Another cog in the wheel of these people’s progress is their unwillingness to make the needed change, Raghav said. He compared the situation to a dislocated bone which would prompt a quick action on the part of the patient, but in this case, Americans won’t take such quick step to research how to go about it financial dislocation, neither will they willfully make critical long-term decisions on their financial lives.

More than 25% of the 30-year-old respondents confessed that they don’t have enough money to save every month at the moment.

Most of the participants (65%) gave encouraging replies that they always plot out their budget plans, however, barely 8 out of every ten among them keep their budget promises.

The research also showed the ability of women to keep their budget plans, which is much stronger men’s determination even to try at all. Men seem to be more generous with their monthly spending which may amount to approximately $130 more than they must have budgeted in one month, but women expend less with $74 more their monthly budgets.

Nonetheless, the statistics showed that men still have more penchant for putting some cash aside for retirement than women. More than half of the 30-year-old participants (52%) also agreed that they are vulnerable to making the most frequent error, which is not having sufficient savings.

In addition to lack of savings, the majority (40%) also do not have sufficient cash for urgent needs. The rest are saving money when it’s already late (28%) and piling up unwarranted debt (38%).

What of those who don’t feel the need to seek economic counseling? They amounted to 67%. The reason behind this low enthusiasm towards financial counselors is likely due to the small number of people (47%) who only have unwavering confidence in these professionals.

Raghav noted that the huge population of financial advisers can cause uncertainty in the society and this can lead to apathy towards them.

The older Americans get, the thinner the chances of them trusting financial experts get. The study showed that those between the ages of 30 to 36 (35%) have higher tendency to believe in them more than those aged fifty-five and above (35%). In this case, more than 50% of Americans ages 30-36 have more opportunity to meet financial professionals.

More statistical results revealed that 71% of the participants between the ages of thirty to forty-five may decide to go on the internet for research even before having a face-to-face meeting with a financial adviser. Only 47% in this category may still decide to fix an appointment with the professional after watching his/her video profile.