To better understand the financial literacy and capability of American households, a national survey of middle-income adults found that of those who did manage to accumulate savings, 43 percent said their saving would last only a month or less.
NeighborWorks America, a nonprofit organization supporting affordable housing and community development, conducted its fifth annual consumer finance survey in March, primarily focused on families with a household income of $75,000 or below.
With the goal of closing the gap between financial literacy and long-term financial security, NeighborWorks America employs training and evaluation expertise to improve the financial capability of the consumer, but also to help consumers understand the effective financial education strategies of financial industry professionals.
“Financial security and financial capability are not reserved for the wealthy,” said Barbara Floyd Jones, senior manager of national homeownership programs at NeighborWorks America. “NeighborWorks financial coaches help low-income wage earners develop tools to support their long-term financial goals.”
Despite low unemployment and a growing economy in the U.S., approximately one-third (38 percent) of American households surveyed said they do not have emergency savings to cover the cost of car or home appliance repairs.
Forty-four percent of adults said that they had little confidence in their ability to weather an unexpected financial emergency. When meeting financial goals, the survey found that adults are struggling to put aside money to build their savings, let alone save for retirement or pay off credit card debt.
While many adults don’t have the resources to pay for a financial advisor to help them navigate their financial situation, NeighborWorks America offers financial coaching sessions to help consumers follow the right financial path. The organization has locations in every state, so consumers can learn how to put together a budget plan, build savings, access their credit scores and open a bank account.
“People need help to create a budget, and NeighborWorks organizations around the country provide affordable financial education and coaching so people can learn how to set and reach goals such as saving for retirement or paying off debt,” Jones added.
NeighborWorks financial coaches develop unique relationships with the customers they serve. Some customers attend just one session, while others continue working with their coach for more than a year to achieve their financial goals. More than 65 NeighborWorks organizations offer financial coaching.
When meeting financial goals, the priority for 28 percent of those surveyed was paying bills, followed by 18 percent who said paying down credit card debt was most important. Twelve percent of adults in the survey said saving for an emergency was their most important financial goal, while just 8 percent considered saving for retirement as the most important goal.