We’ve Got Chills

Americans in Poor Financial Health

By J.J. & Paula Montanaro


Summer is at its peak, and while a cool dip in the pool could be just what you need, what you don’t want is a cold shower. But that’s exactly what it was like when I read the latest survey on America’s financial fitness. The Financial Capability in the United States national survey, conducted by the U.S. Department of the Treasury, gave me chills. 

Let’s look at some of the highlights—or, really, lowlights—of the survey (viewable online at www.finra.org) as an opportunity to examine our own financial habits.

Only 49 percent have an emergency fund
If you fall into the half that doesn’t have this cushion in place, now is a great time to get started. The idea, which is a superb one, is to set aside the equivalent of three to six months of expenses in a cash account like a savings or money market to protect against life’s “what-ifs.” Set up an allotment or an automatic deposit into a separate savings account that you don’t touch unless absolutely necessary to get the ball rolling. Even $500 or $1,000 can insulate you from a lot of the normal crises life throws your way. 

Only 42 percent have determined how much retirement savings they need
Nearly 60 percent of Americans haven’t even tried to crunch the numbers to see if they’re on track to live the retirement of their dreams? Ouch! There are a host of online calculators that can help you plan your strategy and become educated on what you can and should be doing right now.  Take the time…while you still have time.

Only 41 percent set aside money for kids’ college
The latest college education projections for a baby born today peg the cost of a four-year public school education at more than $150,000.  There are a number of tax-advantaged savings vehicles which have come onto the scene including 529 College Savings Plans and Coverdell Education Savings Accounts. 

Over 23 percent used payday, auto title or tax advance loans; pawn shops; or rent-to-own stores
Nearly one out of four folks has tapped into these highly unfavorable ways to get your hands on cash. It’s hard to move forward when you’ve got arrangements like these holding you back.

Only 38 percent obtained a credit report
Your credit report and the score derived from that report are critical to your financial well-being. And a good score could translate to tens of thousands of dollars of interest savings over your lifetime. Make sure your report is accurate.  Hey, the government mandated we be allowed to view our report free each year and you can do that at www.annualcreditreport.com.