No Plan: How Americans Fare in Planning Budgets

This blog spends a good deal of time on creating and maintaining household budgets. Thanks to the amount of hits and comments we receive on a weekly basis, there’s a sense we’re making a contribution to the financial stability of individuals and families across the globe. And then we read the results of a recent Gallup poll and wonder if we’re doing enough to get message across, because a good two-thirds of Americans aren’t taking our advice or the recommendations of other financial folk.

According to the Gallup organization, less than one-third of all American households put together a monthly budget to track their income and expenditures. Breaking down the percentage by group, the number doesn’t move much further up or down. For example, college graduates who prepare budgets are just six points higher, 38 percent, than the national average. The total goes up one digit for households that make an income of $75,000 or more. On the other end of the spectrum, only 26 percnt of those with a high school education or less maintain a routine budget.

The numbers are more dire when discussing long-term financial planning. On the average, a minuscule 30% of the American population plans for their financial future. At the high end, 43 percent, are those making more than $75,000 a year. Those who make less than $30,000 and have a high school education are even less inclined to produce a financial plan for the future.

Folks shouldn’t be surprised at these numbers, because they haven’t changed much over the years. Back in 1951, during a time of relative economic prosperity, the number of American households that maintained a budget was 40 percent. And before the Great Recession hit us, a Pew Social Trends poll reported 48 percent of U.S. homes recorded their finances in a budget.

Why do so many households not prepare and maintain a budget? Here are some potential answers to that question and the advice we give.

We spend it all

They Say: By the time they pay their bills and buy the groceries, there’s very little left to budget, let alone put away for a secure future.

We Say: No matter how much money is left over after each paycheck, it should be divided up in a budget and stored in an emergency fund. Soon enough, there will be money to add to a budget.

Time constraints

They Say: There isn’t enough time in the day to sit down and prepare a budget, let alone maintain it on a regular basis.

We Say: Like you do with other events in your life, time needs to be carved out of your day to work on the budget. By getting into this practice it won’t seem as daunting each week.

Not Enough Money to Plan for the Future

They Say: We don’t make enough on a regular basis to think about planning for our financial future.

We Say: Regardless if you have $10 or $100 left over after each paycheck, it is never too early to start planning for your and your family’s financial future. Think about the simple things you can invest in, like a 401(k) or Roth IRA, and start small. By budgeting you can increase the amount of investment and get a good grasp on what you want your future financial goals to become.