Americans Struggle to Save Despite Optimism about Financial Situation
New Allstate Financial "Life Tracks" poll reveals divide in abilities to make ends meet
Just half (50 percent) of Americans say they have enough money left over at the end of the month after paying for essentials according to the new, second installment of Allstate Financial's "Life Tracks" poll. More than four in 10 (41 percent) are living paycheck-to-paycheck while another 8 percent say they don't earn enough each month to pay for essentials. In the late December 2012 survey, responses pointed to an overall lack of financial management skills and resources, but a strong desire to do a better job in 2013.
"This second Allstate Life Tracks Poll takes the pulse of Americans to measure the health of their personal financial situations," said Don Civgin, president and chief executive officer of Allstate Financial. "Too many Americans are faced with financial challenges today that lead to an unstable future. As financial services professionals, how we bridge that gap and bring greater awareness to the financial issues people are facing, is the true test of measurable success in our industry."
The Allstate Life Tracks Poll is intended to uncover attitudes and behaviors based on a respondent's "life track," or the major life events that individuals face at varying stages of life (see www.allstate.com/financial). The following represents the top findings from the survey on how Americans are managing their personal finances.
Divided we stand
The split between those with money left over after paying for expenses and those that don't is reinforced by findings from the poll. An even 50 percent of respondents feel their personal financial situation is "excellent" or "good," while another 50 percent say it is "fair" or "poor."
- Men (53 percent excellent/good) are more enthusiastic about their finances than women (47 percent excellent/good).
- Single parents (74 percent fair/poor) are notably the most financially challenged of all the "Life Tracks" segments.
- Only 46 percent of those in households making $50,000 per year or less have a retirement plan in place, compared to 89 percent of those in $75,000 or more per year income households.
- Of the households making $50,000 or less annually, just a quarter say they have money left over at the end of the month.
- One-third of college graduates (32 percent) say they're living "paycheck to paycheck," compared to nearly half (48 percent) of non-graduates.
Still, despite the range of financial experiences, nearly all (91 percent) are confident in their own ability to manage their personal finances. This overt optimism trickles down to major milestone expenses along with future security perceptions.
- Forty-two percent of parents are very confident about their ability to pay for educational opportunities for their children.
- Four in 10 (41 percent) Americans say they are very confident about their ability to pay for a new car.
- Close to half (47 percent) of prospective homebuyers are very confident about their ability to buy a new home.
- Forty-one percent are very confident about being able to afford daily expenses during retirement.
- A large majority (82 percent) of Americans think they're doing the same or better financially than their friends, neighbors and co-workers, and more than half (52 percent) say they're doing better than their family was when they were growing up.
Although they have earnest intentions to pay off debt, Americans are "treading water" when it comes to debt, savings and investments. Eighty-two percent of Americans say they make some kind of debt-related payment each month.
- Forty-nine percent say they pay credit card debt; 43 percent mortgage payments; 36 percent car payments; 17 percent student loan payments; and 15 percent medical debts
- Among the half (51 percent) of Americans expecting a tax return, 45 percent intend to pay off debt with the money.
- Sixty-five percent of Americans with credit card debt say their level of debt has increased or remained the same in the past year.
- While a majority say their savings remains about the same (about 60 percent) in the past year, just 15 percent of Americans say their short-term emergency savings has increased, and 14 percent say their long-term savings and investment activity has increased.
Every day, Americans consciously decide to place a higher priority on activities other than their finances, yet they recognize they need to do more to improve their financial situations. On average, Americans say they spend just under three hours per week paying bills and managing their household finances. This is about a quarter of the time they say they spend watching television (12 hours), and one-third of the time they spend surfing the Internet (9.2 hours).
- Fifty-nine percent of Americans say they know what they're supposed to do and generally make the right decisions in regard to their personal finances, but 34 percent say they don't always do it, and 6 percent say they're unsure what to do.
- With most significant purchases, such as a car, television, vacation or banking and investing decisions they've recently made, the majority (74 to 80 percent) of Americans say they spent the right amount of time considering their available purchase options.
- Nearly half (47 percent) of Americans say they're saving less than they should be.
- Forty percent admit they are not handling their personal finances in the way they're supposed to, or that may not even know what to do.
- Fortunately, an overwhelming majority of Americans (91 percent) believe personal financial management is a skill that someone can improve upon during their lifetime.
To motivate consumers to take action on their personal financial situation, Allstate has developed online resources and a compelling, yet humorous video series, produced by everyday people who responded to a crowdsourced call for entries. The first video launched today, featuring "Hank," a baby who helps put priorities into perspective. Two other videos from different perspectives will follow in the coming weeks.
While an individual's recommended actions for tackling their financial fitness challenges depend on his or her personal situation, three basics are relevant to everyone:
- Do your homework: You can find a wealth of valuable yet free information about managing your finances, such as personal finance websites, books, newspapers and seminars. Financial professionals can guide you through this information and help you set financial goals. For information about specific products, such as life insurance, you also can ask for a referral from professionals you currently deal with and trust – such as your auto/home insurance agent.
- Set goals and a timetable to achieve them. But – rather than trying to make progress on all your goals at once – prioritize those goals every year and focus on the two or three that are most important to you.
- Make a date once a year for an annual life insurance checkup to double-check that the amount and type of coverage is right for your current situation.
Reported results are from a nationally representative survey of 1,000 American adults age 18+. The survey was conducted December 15-19, 2012 via landline and cell phone. The survey has a margin of error of +/-3.1% in 95 out of 100 cases. The survey was conducted by FTI Consulting, Inc
The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer, serving approximately 16 million households through its Allstate, Encompass, Esurance and Answer Financial brand names and Allstate Financial business segment. Allstate branded insurance products (auto, home, life and retirement) and services are offered through Allstate agencies, independent agencies, and Allstate exclusive financial representatives, as well as via www.allstate.com, www.allstate.com/financial and 1-800 Allstate®, and are widely known through the slogan "You're In Good Hands With Allstate®." As part of Allstate's commitment to strengthen local communities, The Allstate Foundation, Allstate employees, agency owners and the corporation provided $29 million in 2012 to thousands of nonprofit organizations and important causes across the United States.
# # #