Are You Broke? This Might Be Why

If financial literacy were a course in school, many Americans wouldn’t pass. 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? Share your comments below or on our Facebook page.

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