April is Financial Literacy Month – Many Americans Still Dealing With Financial Uncertainty
By i2c inc.
Read Time : 05 Min
Bankrate just released their Financial Security Index for February. Based on answers to a number of questions, the survey attempts to measure how secure consumers feel about their financial situations compared to 12 months ago. There were a few findings that really caught my eye.
First, only 51% said that they have more in savings than they owe in credit card debt. This is the lowest level since Bankrate started doing this survey in 2011. There seem to be two things going on here. First, people have begun taking on more debt. The Federal Reserve Bank of New York announced recently that the last quarter of 2013 was the first quarter since the start of the Great Recession that household debt increased year over year. Second, the savings rate in the US is just 5%, which is lower than most other developed nations. These two things combined – rising debt levels and low savings rates – are putting many Americans in potentially perilous financial situations. It’s incredible how quickly people forget how bad it was just a few short years ago!
The second alarming stat to come from the survey is related to the first. Bankrate found that people between the ages of 30 and 64 are most likely to owe more in credit card debt than they have in savings. This is worrying because these are the people who are in the prime of their working years and therefore more likely to need a rainy day fund to cover a job loss or unexpected financial setback.
Finally, I was struck by the large number of lower-income workers that reported feeling worse about their savings than they did a year ago. A whopping 44% of those earning less than $30,000/year reported feeling less comfortable with their savings. I have been hearing generally positive news about the economy recently – unemployment is dropping, GDP is up, housing prices have recovered in some markets, etc. – but this statistic makes it clear that there are still many people struggling to keep their heads above water.
Reading the results of the Bankrate survey and learning of the accelerated pace of borrowing really highlights the need for tools that help consumers budget and be financially responsible. People have different reasons for needing to be judicious with their spending, and there are many factors that can make it hard for people to stay on the right track. i2c is in the process of working with Dan Horne, an expert on consumer financial services, on a white paper that explores the topic of budgeting and how prepaid cards and other technologies can aid budgeting. In light of this Bankrate survey and the start of Financial Literacy month on April 1st, the timing for this paper couldn’t be better!
