NORTHBROOK, Ill., and MADISON, Wis. (2/20/13)--While many credit unions are assisting a nation that still struggles to save, a new study points out why it is necessary to keep educating overly optimistic consumers about managing their finances and making saving a life-long habit.
Credit unions help consumers in many ways: with better savings rates, lower interest rates on loans, short-term loan alternatives to payday lending, special programs such as savings lotteries, contests, affordable mortgages, and providing business loans to new entrepreneurs, to name a few. But most of all, they stand out in member-centric financial education.
Americans are treading water and need financial management skills, according to the second Allstate Life Tracks Poll by Allstate Financial. Half of Americans surveyed have money left over after paying for essentials each month, but more than 41% live paycheck to paycheck. Another 8% don't earn enough to pay for essentials.
Consumers' debt is increasing, said the report. Sixty-five percent of Americans with credit card debt say their debt level has increased or remained the same in the past year. Of those surveyed, 49% pay credit card debt; 43% pay mortgage payments; 36%, car payments; 17%, student loans; and 15%, medical debts. Of the 51% who are expecting tax refunds this year, 45% intend to pay off debt with the refund.
Still, Americans remain optimistic about their finances. Roughly 91% of respondents surveyed say they are confident they can manage their personal finances, with 42% of parents very confident about paying for their children's educational opportunities, 41% believing they can afford a new car; 47% confident they can buy a new home; and 41% confident about retirement. Eighty-nine percent indicate they are doing the same or better financially than their friends, neighbors and co-workers. More than 52% say they are doing better financially than their family did when they were growing up.
But their optimism may be tempered with their savings habits, creating a disconnect that will be an opening for credit unions to tout their financial education services. Many Americans, the survey found, place other priorities higher than dealing with their personal finances. Roughly 59% say they know what they are supposed to do and make the right decisions generally, but 34% don't always make the correct decisions and 6% are unsure what to do. Nearly half (47%) say they are saving less than they should be.
The good news: 91% believe personal financial management is a skill people can improve over their lifetime. Enter credit unions, with a slew of tools and programs aimed at members and consumers. For some possible sources credit unions can use to assist their members, use the links.