Do you know how your money is doing?Most Americans lack emergency savings or “rainy day” funds. Only 49 percent of survey respondents reported that they had set aside funds sufficient to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency.
The Financial Industry Regulatory Authority (FINRA) recently released its National Financial Capability Study, which looked at the spending and saving habits of Americans. It revealed some startling information:
Most Americans lack emergency savings or “rainy day” funds. Only 49 percent of survey respondents reported that they had set aside funds sufficient to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency.
The majority of Americans have not planned for retirement. Only 42 percent of the FINRA survey respondents who weren’t retired said they had taken the time to calculate what they would need.
Less than half of Americans have saved money for college. Only 41 percent of those with financially dependent children have set money aside for college education.
Based on this information, the Better Business Bureau of Minnesota and North Dakota (BBB) offers the following recommendations:
--Start calculating now. You’re never too young to start planning for retirement. Decisions about how much to save in order to afford a comfortable retirement require collecting information about several important variables, (including Social Security and retirement plan benefits) and even some rudimentary projections will help to give you an idea of what will be required.
Budget appropriately when it comes time to pay for a child’s education. Over the past decade, tuition and fees at four-year public colleges and universities have increased more rapidly than they did during the 1980s or 1990s, rising by an average of nearly 5 percent each year (adjusted for inflation). With this trend unlikely to abate, an average American family with children can expect to dedicate a sizable share of their resources to pay for college tuition.
--Manage your debt. One of the best ways to ensure a brighter financial future is to manage and eliminate costly debt. The BBB offers “Managing Credit – Made Simpler,” an online learning tool for consumers and small business owners.
--Avoid “get rich quick” schemes. The BBB exposes scams and frauds every day. Sadly, many of these are aimed at investors who have done the right thing by saving some money, but are susceptible to making a mistake when it comes to investing. The BBB also recently partnered with the FINRA Financial Education Foundation to promote smart investing and to help consumers avoid investment scams.
For more information on businesses, charities and investments, visit www.bbb.org.