published Friday, April 6th, 2012

Winsett: Take month to learn about your finances

Jim Winsett

Q: April has been designated "National Financial Literacy Month." Are there consumer and educational tips regarding this designation?

A: The Financial Industry Regulatory Authority National Financial Capability Study conducted recently looked at the spending and saving habits of Americans and came up with some startling information. Give consideration to your personal financial position as you review this information:

• Most Americans lack emergency savings or "rainy day" funds. Only 49 percent of survey respondents reported that they had set aside funds sufficient to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency.

• The majority of Americans have not done any retirement planning. Only 42 percent of the FINRA survey respondents who were not retired said they had taken the time to calculate what they would need.

• Well below half of Americans has saved money for college.

Only 41 percent of those who have financially dependent children have set money aside for college education.

It is National Financial Literacy Month, so it is a good time to reassess your savings and spending patterns to build a brighter future for yourself and your family. BBB recommends the following:

• Start calculating now. You are never too young to start planning for retirement. While individuals increasingly have to take responsibility for their financial security after retirement, the majority of Americans appear not to have done any retirement planning. Decisions about how much to save in order to afford a comfortable retirement require collecting information about several important variables [including Social Security and retirement plan benefits] and doing some calculations.

• Budget appropriately for a child's education. It is widely reported that, over the past decade, tuition and fees at four-year public colleges and universities have increased more rapidly than they did during the 1980s or 1990s, rising by an average of nearly 5 percent each year [adjusted for inflation].

With this trend unlikely to decrease, an average American family with children can expect to dedicate a sizable share of their resources to paying college tuition.

• Manage your debt. One of the best ways to ensure a brighter financial future is to manage and eliminate costly debt. BBB offers "Managing Credit - Made Simpler" at http://www.bbb.org/credit-management, an online learning tool for consumers and small business owners.

• Avoid "get-rich-quick" schemes. BBB exposes scams and frauds every day.

Sadly, many of these are aimed at investors who have done the right thing so far and saved some money, but make a mistake when it comes to investing.

BBB recently partnered with the FINRA Financial Education Foundation, visit online at www.saveandinvest.org to promote smart investing and to help consumers and military families avoid investment scams.

Get answers to your questions each Friday from Jim Winsett, president and CEO of the Better Business Bureau Inc., which serves Southeast Tennessee and Northwest Georgia. Submit questions to his attention by writing to Business Editor Dave Flessner, Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN, 37401-1447, or by emailing him at dflessner@ timesfreepress.com.

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