Despite their concerns though, Americans spend more time worrying about their finances than managing them. Even though 50% of those surveyed by American Express Financial Advisors in compiling the Personal Economy Index believe they could benefit from an expert looking at their personal finances, only 10% have a formal written financial plan to help them reach their future financial goals .
Not surprising then is that o ne out of four Americans does not seek advice when making decisions regarding savings and investments. This may be due to the fact that 40% of those polled do not believe they have enough money to warrant a financial advisor.
“The only economy we can control is our own personal economy and this is the one that matters most,” Charlotte Stallings, Vice President Investment Strategies, American Express Funds . “The best way to gain control of a personal economy is to develop a plan with the guidance of a financial professional.”
The picture may be getting more blurred with time. One third of the survey’s respondents reported that their financial situation has worsened over the past two years. Of those, 40% pointed to an increase in health-care costs are a contributing factor for the decline and a third cited the decline in the stock market as factors.
By gender, women are more pessimistic than men about their financial futures and how the current economy will affect their household’s finances. This in turn translates to more anxiety down the road, as women are also less likely to feel they are “right on track” on the road to their financial destination and less confident that they will be able to retire when they want to.
Age differences also emerged in savings and confidence patterns. One in four young single adults, between the ages of 18 and 39, feel they are “lost and in need of map” or “going in the wrong direction” on the road to their financial destination. Looking for a rock to anchor to, this group is more likely (53%) to rely most on friends and relatives for advice on savings and investments compared to empty nesters – a group over the age of 40, married, no kids in household – who rely on friends/relatives (18%) versus their financial advisor (36%). Empty nesters (53%) are also more likely to be satisfied with their current financial situation and the most secure when compared to other groups including young single adults (38%) and married couples with children (40%).
“The survey shows that the majority of Americans do not have a clear road map for their financial future,” stated Stallings. “Rather than taking control of their personal economies many people are at the mercy of outside influences. This is alarming.”
Those outside influences are made up of a combination both events now, and those predicted for the future. In fact, the survey says four out of five people will face at least one major life event in the next one to two years that will have an impact on their personal economy. These events include:
- getting a new job (29%)
- buying a home (19%)
- having or adopting a child (9%)
- sending a child to college (8%).