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An Attitude toward Money

An Attitude toward Money

 

Northwestern Mutual Insurance Company recently surveyed nearly 2,100 American adults 18 or older to obtain insights into Americans’ attitudes and behaviors toward money, goal-setting and priorities.

Less than one in five U.S. adults (18%) consider themselves a Highly Disciplined financial planner – i.e., they know their exact goals, have developed specific plans to meet them, and rarely deviate from those plans

  • One-third (36%) consider themselves Disciplined – i.e., they know their exact goals and have developed specific plans to meet them, but those plans can deviate at times because they don’t always stay on top of them
  • Nearly half of adults (46%) are either Informal planners or don’t do any planning at all
  • Younger adults (18-39) and more senior adults (60+) have something very important in common – they represent the most disciplined financial planners in the U.S. Meanwhile, adults who fall between ages 40-59 are the most financially unprepared and most likely to identify themselves as Informal or non-planners. The study found that 60% of the youngest Baby Boomers (50-59) acknowledge the need to improve their savings and investing discipline, yet they are the least likely to do so.  Why not?

    The study showed for 25% of Americans aged 50-59, the biggest barrier is simply a lack of interest (25%), while 13% cite lack of money.

    Additionally, among these young Boomers:

  • 70% don’t use a financial advisor
  • 40% say they take an “informal” approach to financial planning
  • 12% wouldn’t call themselves planners at all – the highest percentage of any age bracket surveyed
  • Americans feel slightly better about their financial circumstances today than they did when responding to the same survey a year ago, yet their optimism is tempered by the need to close a gap in their long-term savings and the continuing effects of the slow-growth economy. Forty-two percent of adults age 25 and older expect their financial situation to improve this year, though one in five say they still have a lot of catching up to do.

    The study also revealed some interesting findings when it comes to financial preparedness later in life.

  • One-quarter of adults 25 and older (26%) do not believe they’ll be financially prepared to live to the relatively young age of 75, based on their current financial condition, future prospects and long term plan.
  • One-third (32%) don’t believe they’ll be financially prepared to live to 85. 
  • Nearly 40% don’t believe they’ll be financially prepared to live to 95.
  • One in five (21%) says they are playing “catch up” when it comes to savings and investments. Debt, unexpected expenses and a lack of effective planning are cited most often as the reasons for this.
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     “Personal finances” and “personal health” are the top two priorities for Americans in 2014, ahead of things like “spending time with family and friends” and “career.” But prioritizing appears to stop short of taking action when it comes to personal finance.  While six in ten adults (60%) say their financial planning needs improvement, a large majority are not seeking professional help. Two thirds of Americans don’t have a long-term financial plan and 71% do not have a financial advisor.  

     

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