Financial Planning Obstacles
The study showed that more than six in ten (63%) Americans say their financial planning needs improvement; and that the No. 1 obstacle is not having enough time (24%).
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The majority of Americans (69%) say the pace of society makes it harder for them to stick with long-term goals.
- More than one in four (26%) people say they either often or always feel too busy to think about long-term goals.
- Additionally, nearly one in three (31%) say they find the level of immediacy of society today – characterized by 24/7 connectivity and accessibility – to be distracting.
The study showed that half of all Americans have no financial plan in place, and when asked to specify what type of planners they are:
- 40% described themselves as “Informal,” meaning they have a general sense of their goals and how to meet them, but no specific plan in place.
- An additional 9% say they are “Non-Planners,” meaning they neither have specific goals nor specific plans of any kind.
- One in three (34%) people describe themselves as “Disciplined,” meaning they know their goals and have a plan in place, but deviate at times because they don’t always stay on top of them.
- Just 16% say they are “Highly Disciplined,” meaning they know their goals, have a plan in place to meet them, and rarely deviate.
When it comes to financial planning:
- Gen Y (ages 25-32) may be the most disciplined generation with 24% saying they are “Highly Disciplined” planners. This is a 50% increase over the full-sample average (16%).
- The discrepancy is even greater when comparing Generation Y (ages 25-32) to Baby Boomers (ages 47-66), among which only 14% are “Highly Disciplined.”
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Saving & Spending Habits
The study showed that Americans continue to hold their purse strings tight and favor cautious choices with their money. Nearly one in four people (23%) say they’d prefer to be more cautious but feel they have too much catching up to do; and 22% say they’ve dipped into their retirement or savings in the past three years.
When survey respondents were asked what changes they’ve made in the last three years regarding the way they manage their money, the No. 1 answer – reported by 30% of people – was saving more. Additionally, when asked to indicate their preferred approach toward achieving financial goals, the most common response – chosen by 34% – was “slow and steady wins the race.”
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23% of Americans say they “would like to be more cautious with their money, but have a lot of catching up to do.” Of those respondents:
- More than half (52%) say it’s because of unexpected expenses
- 47% claim it’s because of debt
- 37% report it’s due to a lack of effective planning for the long-term
- 32% are concerned about job security
The subgroups most likely to say they’d “like to be more cautious, but have a lot of catching up to do” include:
- Generation X (32%)
- Adults with children under 18 (32%)
- People with assets under $25K (35%)
When it comes to habits of saving:
- Four in 10 (39%) Americans say they plan to save more in the coming 12 months, which is a jump from 33% who said the same in 2010.
- Interestingly, the youngest generations – Generation Y (56%) and Generation X (52%) – are more likely to say they will save more in the next 12 months, while older generations will save the same amount or less (Boomers 33%, Mature 16%).
- Overall, half (51%) of Americans say their approach to the money they have today is “to save and be careful, aim for long-term financial security.”
- Only 14% say, “Spend. Enjoy what has been well-earned and live for today.”
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Technology and Society
The efficiency that technology affords us is undeniable. Yet around-the-clock connectivity and instant access to information is distracting millions of Americans, and having a deep impact on long-term planning.
Nearly one in three (31%) Americans say they find the immediacy of society today (email, texting, instant messaging, etc.) distracting, and an alarming 69% say the fast pace makes it hard to stick to long term goals. While that’s a slight decrease from the 74% who said the same in 2011, it’s still a considerable majority.
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Two-thirds (66%) of Americans say the immediacy of having electronic devices is efficient both in the short-term and long-term, while one-third (34%) say it’s efficient only in the near-term. Given those efficiencies, it’s no surprise that usage is up.
- More than one in three (36%) people say their usage of electronic/mobile devices (smartphones, cell phones, tablets, etc.) has increased over the past year.
- That number is even higher for Gen Y (43%), men (39%), and parents (43% with kids under 18; 41% with kids over 18).
Interestingly, older generations seem to be struggling more than their younger peers when it comes to balancing the pace of today’s society with focusing on long-term goals; but younger people report higher levels of distraction overall:
- Majority of Boomers (74%) and Matures (75%) say the pace of society makes it harder for them to stick with long-term goals, whereas only 61% of Gen Y and 63% of Gen X say the same.
- 35% of Gen Y and 36% of Gen X say that the immediacy of society today is distracting, whereas only 30% of Boomers and 24% of Matures say the same.
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Best Financial Decisions
When it comes to managing money, the large majority of Americans today are not looking for shortcuts or get-rich-quick strategies.
Three quarters of people prioritize long-term planning over short-term performance, and one-third say “slow and steady wins the race” best describes their approach to future financial goals.
Download Planning & Progress 2013 - Best Financial Decisions
The priority on long-term planning comes across loud and clear when looking at what Americans consider the most important financial decisions in life.
People aged 55+ believe the best financial decisions they ever made include:
- Saving early (40%)
- Paying off a mortgage (40%)
- Bought real estate at a good price (29%)
- Invested heavily in my 401(k) (27%)
- Made sure my family is protected (22%)
People aged 25-54 believe the best decisions they will have to make in coming years will be:
- Starting to save early (53%)
- Making sure my family is protected (52%)
- Relying heavily on my 401(k) (25%)
- Buying real estate at a good price (20%)
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Download Best Financial Decision infographic