Financial advisers have a saying: When the stock market is going up, everyone looks like a genius. These days, folks aren’t feeling so smart—and not just about their investments, but about many aspects of their personal finances.
Indeed, 42% of Americans give themselves a grade of C, D or F when it comes to personal finance, according to the 2012 Consumer Financial Literacy Survey from the National Foundation for Credit Counseling and the Network Branded Prepaid Card Association. That’s up from 35% in 2010, and it suggests that the enduring slow economy is leading to some cathartic moments in millions of households. For example:
- 80% of adults say they could benefit from the advice of a professional when it comes to everyday financial decisions—up from 76% last year.
- For adults seeking help with a debt problem, the first choice (27%) remains friends and family. But 13% say they would contact their lender first—up from 8% last year.
- The proportion of adults who have ordered or received their credit score in the past 12 months jumped to 44% from 37%.
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These findings draw a picture of consumers coming to grips with their inability to navigate the long economic malaise. They can’t paper over their money problems any longer. The proportion of adults not paying their bills on time jumped to 33% from 27%. Two in five are saving less than they did last year and the proportion of adults with zero savings (39%) has been on the rise for two years.
Yet the weak economy is not entirely to blame. The survey also found that just 43% of adults have a budget; 22% have no idea what they spend on housing, food and entertainment. A budget is your best tool for making ends meet. Start with a simple strategy—50% of net income for daily essentials like rent and groceries, 20% of net income for financial priorities like retirement savings and paying down debt, and 30% of net income for lifestyle choices like shopping and traveling.
The survey found that spending is up for the second year in a row, which is no way to get your financial house in order. A budget will help there too. Credit card applications are up, as are credit card rejections (bad for your credit score).
(MORE: Inside the Jobless Generation)
Meanwhile, millions are turning to prepaid debit cards as their plastic of choice; 15% of adults have used one in the last 12 months because they are convenient (78%), prevent over drafting (72%), and are safer than carrying cash (73%). All true. But these cards are often laden with fees. Some charge activation fees, monthly maintenance fees, cash withdrawal fees, reloading fees and inactivity fees. If you’re a fan, keep these costs to a minimum by shopping for your prepaid debit card here.