Budgeting Still a Challenge for Most Americans
The beginning of the year is the perfect time to re-evaluate finances and create a new budget. But creating and sticking to a budget is an area where a lot of Americans struggle.
According to a recent CFP survey, 43% of consumers in the United States have a written budget, but nearly the same amount (40%) have never had one. The remaining 17% say they had a budget at one point but no longer do.
The budgeting dilemmas come from two key sources: the ease of spending money and the difficulty of tracking it. According to the survey, 77% of respondents said it is easy for them to spend money. Meanwhile, 59% say they do not track their monthly spending, and just 41% do monitor that spending.
When asked if credit cards contribute to overspending, 64% of respondents said they strongly or somewhat agreed. A simple way to combat this is to only use credit cards when you can pay for that transaction in its entirety at the end of the month. Make a purchase on the card to build up credit, then pay off the balance with the funds you already have. Otherwise, create a precise and attainable repayment plan for every credit card purchase.
Despite overspending habits, 59% of Americans say they save more than they spend. And while many consumers do not have a written budget, 60% say they review bank statements, credit card bills and receipts to keep track of their spending.