Friday, May 2, 2008

2008 Financial Literacy Survey

The 2008 Financial Literacy Survey, conducted by Princeton Survey Research Associates on behalf of the National Foundation for Credit Counseling and MSN Money was released on April 29. It key findings are useful for each of us to consider, while we reflect on our own financial situation. Feedback is essential for management and gauging our financial performance against the average person can be useful in supporting what we are doing or in motivating us to change. The key findings, with links to Office for Financial Success resources, follow.

Significant numbers of households struggle with mortgage payments. One in ten homeowners, with a mortgage, reported being late or missing at least one mortgage payment last year. One quarter of all renter households say that they do not know enough about owning a home to buy one.

Millions have serious difficulties paying bills each month. The majority of the public pays their bills on time. However, seven percent of the population report receiving calls from credit collectors or are contemplating filing for bankruptcy. For those in the 18-29 year old category, only 59% report paying their bills on time every month, a basic practice for sound household finances.

Only a minority of the population has a budget. Keeping a budget is a key to sound financial planning, yet only 42% report keeping close track of how much they spend on budget categories. This does not vary by income, gender, or age.

Emergency funds are lacking. The majority of the public does not have an adequate emergency fund, defined as 3-6 months living expenses. More than one-third have no money saved in non-retirement savings and one-quarter have no retirement savings.

Many are underinsured. Only one-quarter of the population of baby boomers reports having long-term care insurance. Only one-in-ten renters have renter’s insurance. Insurance is a cornerstone to protecting our financial lives.

Credit report, what credit report? Slightly more than one-third of consumers, thirty-seven percent, report having checked their credit report over the past year. This free service is a key to protecting your identity and knowing your credit score.

Parents and home are the financial educators for most of the public. Almost half of those reporting that they keep track of their finances say that they learned it from their parents. Unfortunately, the half that does not monitor their finances, probably learned that from their parents, as well. Parents have a huge influence over us, especially with respect to money matters. If the influence of your parents is not quite what it should have been, then learn it on your own. You have no choice. Take a personal finance class, learn from financial professionals, or seek the help of a valued friend or co-worker to help you in this area of life.

Americans worry about their income. Only one-quarter of those surveyed report that they are confident their income will keep pace with inflation. Approximately one-half report that they believe their income will decrease in purchasing power. One must continually update their human capital by staying abreast of changes in their fields. Look for positive things that you can do to set you apart from your co-workers to help your earnings grow over time.

The above information was taken from the 2008 Financial Literacy Survey, produced by Princeton Survey Research Associates on behalf of the National Foundation for Credit Counseling and MSN Money and released on April 29, 2008. If you find this Tip to be useful and you know a friend that would benefit from reading it, pass it along and encourage them to sign up to receive the MU Financial Tip of the Week. All they need to do is to send an email to with Subscribe in the subject line. Thank you and enjoy your Financial Success.

- Robert O. Weagley, Ph.D., CFP(r)
Chair, Personal Financial Planning
University of MissouriColumbia, MO 65211

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