More Risk, But Not by Choice

People’s attitudes and behaviors toward money, goal-setting and priorities were examined in Northwestern Mutual’s 2013 Planning & Progress Study, which found that Americans continue to hold tight to their purse strings and choose cautiously how to spend their money. But these attitudes can be finely shaded. Almost a quarter of the respondents (23%) said they’d prefer to be more cautious but feel they have too much catching up to do, and 22% said they’ve dipped into their retirement or savings in the past three years.

When U.S. adults were asked what changes they’ve made in the last three years about money management, the No. 1 answer was saving more, according to nearly a third of those surveyed (30%). “Slow and steady wins the race” was the most common response (34%) for the best way to achieve financial goals.

“It’s good to see that, on balance, people are not looking for shortcuts or slipping back into bad habits, especially now that we’re seeing tangible signs of a slowly recovering economy,” said Greg Oberland, executive vice president of Northwestern Mutual. “Still, too many people are trying to play catch-up, which can lead to risky decision-making. We tell people whether they’re behind, ahead or anywhere in between there is no substitute for a long-term financial game plan.”

Some 23% of Americans say they “would like to be more cautious with their money, but have a lot of catching up to do.” Of those who say they have catching up to do:

• More than half (52%) point to unexpected expenses;
• 47% blame debt;
• 37%  report it’s because of a lack of effective planning for the long term; and
• 32% are concerned about job security.

(Cont’d…)

Those most likely to say they’d “like to be more cautious, but have a lot of catching up to do” include:

• Generation X (32%);
• Adults with children under 18 (32%); and
• People with assets under $25K (35%).

“Our hope is that, over time, these numbers will decline as a result of not just of an improving economic landscape but also the widespread adoption of a more practical planning approach toward achieving financial goals,” said Oberland.  “We are now a few years removed from the worst of the financial crisis and people continue to save and favor responsible choices.”

Americans Are Saving More  

Americans are saving more. The study found that when it comes to savings behaviors:

• Four in 10 Americans (39%) say they plan to save more in the coming 12 months, which is a jump from 33% who said the same in 2010. 
• The youngest generations – Generation Y (56%) and Generation X (52%) – are more likely to say they will save more in the next 12 months, while older generations will save the same amount or less (Boomers 59%, Mature 74%).
• Overall, half of Americans (51%) say their attitude about money they have today is “to save and be careful, aim for long-term financial security.”
• Only a few (14%) took a carpe diem approach, saying “Spend—enjoy what has been well-earned, and live for today.” 

This is the second set of findings released from Northwestern Mutual’s 2013 Planning & Progress Study, which explores the state of financial planning in America today, and provides unique insights into people’s current attitudes and behaviors toward money, goal-setting and priorities. Previously released results examined the lack of time people have to devote to financial planning. See “Time is Main Obstacle to Financial Planning.”)

The study was conducted online between January 9 and January 23 by independent research firm Harris Interactive, and surveyed 1,546 Americans age 25 or older. Results were weighted for age by gender, education, race/ethnicity, region and household income. 

The Northwestern Mutual 2013 Planning & Progress Study can be downloaded here.