Majority of American adults do not budget
A budget is one of the most basic ways of taking control of your financial life. For more than 50 percent of American adults, however, budgeting is not yet a habit.
According to the 2012 Consumer Financial Literacy Survey of American adults, only about 44 percent of Americans have a budget. Twenty-two percent of adults report that they have no idea what they spend on certain major expenses, including entertainment and housing. This means 34 percent of Americans have a vague idea of the money coming in and going out, not a specific budget.
Being financially aware
Close to the same number of individuals who have a budget have received or ordered their credit reports over the last year. Ordering a credit report allows you to see your financial history as creditors and potential employers see it. Being financially aware means knowing where you stand in the financial system both personally and as a part of the larger economy. We have extolled the virtues of ordering your credit report time and time again; the once-a-year report not only alerts you to potential problems with your credit, but also to the challenges you face.
The effects of spending
Though more people are making it a point to be more aware of their credit and budget, this does not mean adults are being more responsible with their money. The number of adults with no savings at all has been going up, and 40 percent of adults are saving less than they did the year before. Personal spending is also increasing, as is the number of credit card applications. All told, all of this slow spending is adding up to a less financially secure population, which could add up to disaster very quickly.
Showing a reduced trust of institutions
The institutions that have a big hand in financial transactions also appear to be losing the trust of customers. About 55 percent of Americans, 6 percent more than last year, think it is acceptable to default on debts that they can no longer afford. Many people are choosing to use prepaid debit cards for their plastic transactions, as opposed to credit cards. These prepaid debit cards can prevent overdrafts and do not charge interest. These debit cards, however, generally charge additional fees for their services. Debit cards attached to bank accounts have a few more protections, but not as many as most credit cards.