Money

When it comes to finances, Americans are clueless

Confidence is good. Overconfidence can be a problem.

When it comes to making important financial decisions, many American adults appear to be “overly confident,” according to the 2015 Financial Literacy Survey from the National Foundation for Credit Counseling (NFCC) released on Tuesday.

“This year’s results emphasize that what people claim to know about financial literacy is not in alignment with their actions,” said Bruce McClary, NFCC’s vice president of communications.

The online survey of 2,000 U.S. adults conducted by the Harris Poll found that:

  • 92 percent said they were very or somewhat confident in their most recent big financial decision, such as picking a credit card, buying a car or refinancing a mortgage
  • 59 percent said they deserved a grade of “A” or “B” when it comes to their own personal financial knowledge.

And yet:

  • 70 percent said they are currently worried about their personal finances
  • 60 percent don’t have a budget
  • 24 percent are not paying their credit card bills on time
  • 21 percent say they’re spending more now than in 2014.

“It’s one thing to know about healthy financial behavior and another to put that knowledge into action, so this really calls into question the top grades so many people give themselves,” McClary told NBC News.

When it comes to savings: More than half (57 percent) of those surveyed said they are saving money for their retirement and 66 percent have non-retirement savings. When asked where they save or invest their money, most (65 percent) said a savings account. Less than three in ten adults said they use a 401(k) or IRA that would likely provide a higher yield.

Despite their confident attitude, three out of four respondents said they would benefit from advice about everyday financial questions from a professional. And yet, 25 percent said they’d turn to family and friends if they had debt-related financial problems. Help is available, often for free, from a non-profit financial counseling service.

Credit Card Debt

Some progress is being made at whittling away credit card debt, but there’s still a long way to go. One in three households (33 percent) still carry credit card balances from month to month and one in ten adults (11 percent) said they roll over $2,500 or more in credit card debt each month.

Cliff Goldstein, personal finance analyst at NerdWallet, the website that funded this survey, told NBC News he’s concerned that a third of all U.S. households can’t pay their credit card bills in full each month.

“This debt continues to build up over time and becomes more and more unmanageable, until it gets so bad that they are forced to do something, such as declare bankruptcy,” he said.

There are various ways to get out from under this debt – from transferring the balance to a zero percent rate credit card to working with a debt counselor – but Goldstein said many people don’t seem to know about them.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.

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