Only 8 percent of the 644 respondents to the website survey said they had a firm grip on their personal finances. Thirty percent classified themselves as “mid-level management;” 35 percent as “entry-level” trying to learn the ropes; and 26 percent said they’d like to shuck the job entirely. Another survey by the foundation showed that 41 percent of the respondents would grade themselves at a C or lower in that area of their adult lives.
Most of those who were surveyed most recently and felt themselves inadequate to managing their finances also were under the impression that they were the only ones who were rotten at the job. But the truth is that many people are uncomfortable with the assignment, said Gail Cunningham, a spokeswoman for the foundation.
At the root of the problem is the fact that fewer than half the states require any education regarding personal finances to gain a high school diploma, Cunningham said. Most people learn from their parents, many of whom have the same lack of expertise when it comes to managing their money. It becomes a generational failing.
Many people seek financial counseling to help them, often after their finances are already in shambles. The typical household asking for counseling has $35,000 in annual incomes and unsecured debt of $17,500 spread over 5.7 credit cards. Poor management recently topped “reduced income” as the primary impetus for counseling. Poor money skills matched to poor nutritional skills.
Those who line up for credit counseling are primarily in the age range from 25 to 54, with young adults 25-34 at the top of the list (24 percent.) The lowest cohort was in the 45-54 age group, 21 percent of the total, while 23 percent were in the 35-44 age range. Those statistics indicate that financial problems are not uncommon all along the spectrum, boding ill for those who are still in the early stages of their work history. For some, recovery is a lifetime burden.
Other findings that cause concern for the credit counseling industry:
– Some people are earning more as the economy improves, but they are not managing the additional income well and the financial stress continues.
– Owing more than your income will support easily (a high debt-to-income ratio) makes it harder to meet debt and hinders future borrowing.
– The number of credit cards an individual or family has is not as relevant as how those cards are managed. Maxing out the credit lines is likely to reduce credit scores, impacting the ability to buy such things as homes or automobiles.
Last year, more than 1.5 million consumers sought help at the foundation’s counseling agencies, sharing concerns about debt, housing, budgeting and bankruptcy.
To learn about resources for free and affordable confidential advice, call (800-388-2227.) Spanish-speakers call 800-682-9832. Or visit www.nfcc.org.