New Survey Shows Consumers, No Matter Their Income or Assets, Need Support with Spending, Household Budgeting

Most acknowledge budgeting gives them benefits like control, confidence and security

Despite Americans’ awareness of their increased spending in 2018, a significant portion still do not adhere to a budget, according to a new survey released today by Certified Financial Planner Board of Standards, Inc. (CFP Board) in collaboration with research-led consulting firm Heart+Mind Strategies. 

Following a holiday season where spending reached $850 billion, Americans’ may be experiencing a holiday spending ‘hangover’ considering these findings:

• 77 percent find it easy to spend money

• 64 percent find it easy to overspend when using a credit card or mobile payment

• 59 percent are not tracking their spending

• More than one-in-three confess spending more than they save

• Two-in-five have never had a budget

“The beginning of the year is the perfect time to review your financial situation and create a budget to get back on track and achieve your goals,” said Susan John, CFP® - Chair of CFP Board’s Board of Directors. “Determine your monthly income, the amount you spend on essential expenses every month and allocate the remaining amount between saving, investing and recreational spending.”

One of the critical barriers to developing an effective budget is likely confusion around what true budgeting entails. While 43% of individuals surveyed believe that they have a budget, most define budgeting as using receipts and bank/credit card statements to keep track of spending, rather than having a system in place that outlines their spending for specific household needs over a period of time or working with a financial professional to help them create a spending and savings plan.

Despite this confusion or lack of initiative, consumers do see significant benefits to developing and adhering to a household budget once they are made aware of how they could do so.  There is nearly universal recognition of the benefits of having a household budget—all respondents cited providing control over money as the top advantage of having a budget, 68 percent agree that having a household budget would help them reach personal and family goals, and 67 percent say that if they had a budget it would have a great impact on their confidence in their financial security. In fact, after learning about the many benefits of budgeting, there was an 11 percent increase in the number of consumers who said they are likely to prepare a budget next year.

Having a household budget positively effects a consumers’ emotional state by reducing stress, anxiety and frustration. Consumers who have a budget feel more in control (62 percent), more confident (55 percent) and more secure (52 percent). Whereas consumers without a budget are more likely to feel not in control (19 percent), worried (18 percent) and stressed (17 percent). There is a desire to have control over their money, but many are struggling to do so. A budget would help increase their feelings of control, confidence and security while at the same time reducing their anxiety.

“As you start planning for the new year, I encourage you to meet with a CFP® professional who is rigorously trained to work alongside clients to put together a comprehensive and holistic plan, which includes a household budget,” said John. “A partnership with a CFP® professional will help you take control of your finances and establish a roadmap to achieve your goals.”

More information on the survey is available in an infographic here. Learn more about managing spending and budgeting, CFP® certification and where to find a CFP® professional at www.LetsMakeaPlan.org.

Note on Methodology and Survey Report

The online survey was conducted October 23-26, 2018 among a national sample of 300 adults between the ages of 35 and 65 years of age, who are the primary or shared decision maker for personal finances and have investable assets of $100K+. A copy of the survey report by Heart+Mind Strategies can be accessed here or at www.CFP.net.

Editor’s Note: This survey is part of a series of surveys and research CFP Board will be releasing monthly throughout 2019. The surveys and research will look at consumer and advisor attitudes, points of view and examine issues facing the financial planning profession.