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Are you broke? This might be why

A study reveals that most Americans lack basic financial literacy. Do you?

By Stacy Johnson Apr 3, 2014 4:05PM

This post comes from Krystal Steinmetz at partner site Money Talks News


Money Talks News on MSN MoneyIf financial literacy were a course in school, many Americans wouldn’t pass.


Man with empty pockets (© Digital Vision/Digital Vision Ltd.)

That’s the key finding of the Financial Literacy Survey, compiled by the National Foundation for Credit Counseling.


In a press release, Susan Keating, president and CEO of the NFCC, said:

This year’s survey once again confirms what we already know: The need for financial education is great.


Without a solid foundation on which to base everyday financial decisions, Americans are on a slippery slope as they begin to rebuild their financial lives following the Great Recession.

Below are some other findings of the eighth annual survey, which coincides with National Financial Literacy Month. The findings could double as indicators of why so many Americans complain about being broke.

  • No budget. Described by the NFCC as a “building block of financial stability,” 61 percent of Americans admitted to not having a budget.
  • Credit card debt. The NFCC survey finds that 34 percent of Americans carry month-to-month credit card debt. If that’s not bad enough, 15 percent of people admit to rolling over $2,500 or more each month, which costs consumers about $370 in interest alone in the first year, according to Time.
  • No savings. About a third of people reported not having a rainy-day fund. And when it comes to saving for retirement, a third of respondents said they haven’t saved a dime.
  • Late paying bills. Nearly 25 percent of Americans said they don’t pay their bills on time. Late payments lead to late fees and higher interest rates on credit cards, plus they can drag down credit scores.

Yikes, right? Not surprisingly, 41 percent of folks would grade themselves a C, D or F when it comes to financial know-how.


Business Insider said the results of the survey are dreadful, but that there are things you can start doing today to take control of your finances.

  • Net pay. Figure out how much money you're bringing home after taxes. You need to have a starting point to create a budget that works for you.
  • Track major expenses. This includes rent/mortgage, utilities, car and other payments that you make monthly. Subtract them from your take-home pay to see how much money you really have left each month to work with.
  • Other spending. “Before you plan where the rest of your money should go, you need to find out where it's going today,” BI said. No matter how you track it – with an iPhone app, an Excel worksheet or our partner PowerWallet -- it’s important to see where you could potentially cut your spending.

What do you think of the financial literacy survey? Were you surprised at the results? 


More from Money Talks News

457Comments
Apr 3, 2014 5:50PM
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Well I'd say Financial Planning/Budgeting should be a required course in high school.  It could be the most important subject matter to teach. 
Apr 3, 2014 5:24PM
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It is simple.

My grandparents used to say never let your outgo exceed your income.

It isn't rocket science.

Apr 3, 2014 11:26PM
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There is no more personal accountability in this country,everything is somebody else's fault, and our government leads the way.
Apr 3, 2014 7:44PM
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Don't spend more than you make.  Is this so difficult to master?  If you can't afford kids then keep your pants on.  That evening of fun can cost you for the next 18 years or so. If you can't afford the newest tech toys then don't buy them.
Apr 4, 2014 8:22AM
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And of course this.

You are not entitled to Welfare; you are not entitled to Medicaid. You are not entitled to free legal care, an education, or a cell phone. Anything you get is a gift to you from those who pay your way through life and you should get down on your knees and be thankful. No one is entitled to something they did not earn. Welfare is to be a hand up, not a hand out. It is not meant to be forever, it is not meant to be a way of life. It is not a gift for, or to, your next generation. The world owes you nothing. I owe you nothing. This country owes you nothing except a return of what you have given; Nothing more. WHAT HAVE YOU GIVEN?

Apr 3, 2014 8:44PM
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I am at least glad I have a 401K at work; I don't save much because I don't make that much.  No credit cards debit, but I do have a car payment and a small house payment with those and utilities there is too much month left at the end of the money.

Groceries have gotten more expensive, I try to buy buy at Costco and Sam's, but a lot of the time it is cheaper to do the Wal-Mart thing on several products.  It is cheaper that way, and having a freezer helps.  Also, I have my garden planted, so that will help a little

I don't go out, just to work and home pretty much, I do have cable and internet.  But since that is the only form of entertainment I have, I go with that.  

It is just hard to save anything when the economy is in dire straights.
Apr 4, 2014 12:07AM
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People live beyond their income - BOTTOM LINE.  They must drive that Lexus, must watch movies on a 60" 4K T.V., must have an IPHONE with unlimited everything, etc....

 

I drive a 4 year old car, use a Tracfone "Pay as you go" plan, have a 720P T.V., and pay my bills on time every month. 

 

I have absolutely no compassion for these losers that spend to the limit and must own every toy ever created.

 

I laugh as the items get repossessed off their property.

 

The End:)

Apr 3, 2014 11:33PM
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Use it up.
Wear it out.
Make it do.
Or do without.
Apr 4, 2014 3:42AM
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This Mexican goof at my work bitches about his financial situation all the time but his wife keeps popping out kids left and right. Get a clue people.
Apr 3, 2014 9:14PM
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In talking to older teenagers, I was dismayed to find that most knew more about applying for various kinds of welfare and food stamps than they did about managing money and living on budgets. What are our students taught that will be of value to them in life? Unless preparing them for socialism is the goal of our liberal education system.
Apr 3, 2014 5:33PM
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One major factor is unstable employment can really damper budgeting.
Apr 3, 2014 9:14PM
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I don't understand some people. They always complain they don't have money yet they are walking around with smartphones, Brand New cars, eating out all the time... And half they time they make more money than those who aren't complaining.



I know in High school, my economics teacher was saying how he and his wife {both teachers} don't make much money anymore and it's a struggle to survive on ONLY 60k a year. Of course with my smart mouth, I said my parents make about half that together, and we're doing fine. Shut him up and didn't hear him complain about money the rest the term lol. And his kids were out of the house and my parents and my brother and me.

Apr 3, 2014 6:42PM
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You don't "deserve" anything.
Stop spending money on things you think you "deserve".
Apr 3, 2014 7:13PM
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According to the Fed there is no inflation.You aren't paying more,you're just getting less.
Apr 3, 2014 5:58PM
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--No Budget, Debt, No Savings, Late Paying Bills

Sounds like the Federal Government except for the Late Paying Bills one.  They do get freshly printed money from the Fed Reserve to pay bills so that will never be an issue.  And to their credit I think they finally passed a budget after years of foregoing one.  

I guess we shouldn't be surprised since the government is made up of Americans and the survey proves we are financially illiterate.  Why would we expect the results to be any different?
Apr 3, 2014 9:51PM
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Our school introduced us to basic savings/checking book deposits while in the 7th grade. The teachers then taught it well. Finances might not be taught anymore. It should be.
Apr 4, 2014 8:24AM
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What I would do

            No government sponsored aid to foreign countries. No prohibiting individual aid to a foreign country unless the country is an enemy.

            No tax on wages. No tax on investments. Tax on sales only.

            No aid to anyone who is not a citizen. No aid to anyone who is a drug addict or alcoholic.

            All costs for airports (security, flight control) are to be paid by ticket fees and fuel surcharges.

            All costs for road construction, maintenance and public transit to be paid by gas taxes or tolls.

            To be a citizen in full standing you must be born of two citizens or be born of one citizen on United States land. Being born of one citizen in a foreign country or being born in this country of two non-citizens would give you the right of dual citizenship on your 18th birthday; you would not be entitled to any benefits you had not earned.

            No elected or hired employee of the government would be exempt from any law.

            All government employees would be part of SS. No pensions. Including judges, congress and the president.

            The president would be elected for one, six-year term. Could run again in six years after leaving office.

            The senate would be elected for one, six-year term. Could run again in six years after leaving office.

The congress would be elected for one, three-year term. Could run again in three years after leaving office.

No lawyer could run for congress or for president. It is a violation of the separation of powers. Lawyers could only be judges.

            No federal government employee would be allowed to belong to a union.

            Stop all visas for any reason from countries that are hostile to the United States, and stop visas to anyone who is a citizen of that country.

            All students on education visas would be required to check in and update or confirm their addresses twice a year.

Anyone here on a work visa would be required to check in and update or confirm their addresses once a year.

            All embassies in hostile countries to have marine security.

            Suspend all immigration until we have our system in order. Allow states to activate the National Guard to patrol the borders.

            The National Guard could only be deployed in the United States. Each state would be in control of its own units and only the state could have the power to call them up for duty.

Apr 3, 2014 6:18PM
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It's hard to be good with money when you don't have much coming in. When you live paycheck to paycheck it is a struggle just to survive. The cost of living is surpassing the average household combined income which is $50,000.
Apr 3, 2014 6:50PM
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No budget. Debt. No savings. Late paying bills.

Sounds like Uncle Sam under the Dear Leader!!!

Apr 4, 2014 8:22AM
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This is why.

Food Stamps are one of the most abused and wasteful social program this country has ever developed. A family of four receives more money monthly then my family of five spends a month on food. The amount paid out each month should be cut by at least one third. Purchases by food stamps should be (if not already) restricted to the following: Fresh/frozen non prepared meats & fish, fresh/frozen non prepared vegetables, deli meats/cheeses, canned goods, breads, non sweetened dairy, and non sweetened juices. The following should always be banned, and processes need to be in place where not already, to restrict: Soda, bottled water, power and energy drinks, sweetened juices, coffee, tea, ice cream, candy, energy bars, any pre-prepared meals or sandwiches, snacks/junk food, or any food that is mail ordered or shipped anywhere. If these rules would be followed, and recipients would learn how to shop and properly eat, no one would be hungry and we the taxpayers would save billions.

            Tobacco and alcohol should be banned from purchase by welfare funds. No cash should be allowed to be pulled off of any assistance cards except at banks and should be limited to a very low percentage of funds.

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