If a recent survey by Bankrate is to be believed, Americans are fairly relaxed when it comes to money, even though they have just emerged from a recession that had many casualties. Whether they regard that recession as something that will never be repeated or not, it seems that the dominant view is that ‘tomorrow’ will look after itself. The level of credit card debt in the country, around $900 billion suggests that consumers are happy to spend now that society’s confidence has returned. In the survey fewer than 20% said that their priority was saving which is certainly bad news for those expecting the Social Security System to look after their retirement years. It certainly looks ill-equipped to do so without a significant input of extra revenue.
Around 40% of citizens responded in the survey by saying they were simply concentrating on paying their current bills. This raises an obvious question! Are they spending too much and potentially therefore living beyond their means? If they are in middle age and beyond what is going to happen when the monthly pay check stops because they have retired? Clearly many will not be able to afford to do so, but may have little choice. That figure of 40% is not a new phenomenon; it has been a consistent figure for a few years now.
The Young Seem to Get the Message
The good news is there appears to be more responsibility among the young who recognize the importance of saving. Perhaps older people think it is too late to start so why bother? Certainly the recession may have been a blow that has left them dispirited. The future will arrive and for some it may well be bleak. Every successful business has a budget and monitors it on a regular basis, amending and adjusting as circumstances dictate. Individuals should be doing the same thing and getting themselves into a situation where they are saving money both in order to be able to address a financial emergency such as a medical bill but also to build up a retirement fund to go alongside the benefits they will be able to draw from the Social Security System.
Education Is a Factor
A closer look at the survey respondents suggests that those with a better education, and as a result higher income, are more likely to save than those lower down the scale in those two areas. While the US Economy has been improving that has not really been reflected in wage growth so those at the lower end face a battle to pay their bills while putting money aside for the future, even if they were inclined to do so.
There are some fairly basic steps that everyone can take to improve their finances though it needs the preparation of a budget to begin the exercise, if only to see written in front of them the facts about their finances and how they are spending their money. If they are paying unnecessarily high rates of interest on credit card debt they are wasting their money.
Pay Off Credit Card Balances
Interest rates have been low for some time and lenders offer competitive rates to those with good credit scores. Even those with a poor score and clearly in financial trouble can get help if they have a regular income. They must be able to demonstrate to lenders that they are capable of repaying a loan by instalment. If they can they would be advised to use the facility to get rid of debt that is incurring high interest, namely credit card balances. It is only part of the solution for those in trouble. There are other economies that are possible including a cheaper utility or telephone network provider. Everyone should be able to look at their expenditure and make a few savings.
Those savings are only valuable if they are saved or used in a positive way to reduce debt. They are not an excuse to buy a new television or furniture. Such things may look nice for a short term but for a happy life they are an irrelevancy compared with being able to get rid of stress and sleep soundly at night. Strangely it seems most Americans can live quite happily with debt if the survey is to be believed. Strange!?