A recent poll highlights that 43% of Americans lack understanding about the 401(k) retirement savings plan. The study, conducted across 2,000 participants, also assessed the overall financial literacy, habits, and attitudes of Americans towards personal finance.
The survey results point to a general lack of financial knowledge among the American population, with 35% admitting they don’t understand the term ‘interest.’ Furthermore, only 30% are confident in their ability to ace a personal finance trivia quiz.
Interestingly, despite recognising their lack of financial acumen, less than 40% believe they are more financially savvy than their peers. Procrastination in adopting positive financial habits is also prevalent, especially among Gen Z at 49%, while only 22% of Baby Boomers procrastinate in this area.
The reasons for financial procrastination include stress (25%), a belief in irreparable financial damage (16%), and forgetfulness (13%). Greater financial education is therefore needed to remedy these issues.
In daily financial routines, Americans check their banking app twice a day on average. However, anxiety when accessing bank accounts prevails, with 50% of participants reporting such feelings. Gen Z individuals showcase the highest anxiety rate at 65%, with Baby Boomers showing the least at 26%.
On the brighter side, 80% of respondents claim to budget their income, with Baby Boomers and Millennials leading the pack by sticking to their plans 81% of the time.
Assessing American financial literacy and habits
Notably, consistent savings are reported by 65% of participants, with Baby Boomers maintaining the highest savings ratio at 75%.
In terms of saving strategies, many respondents reported measures like buying discounted items, using coupons, reducing clothing expenditures, and bargain hunting. Extreme methods include avoidance of dining out, social gatherings, and traveling. Indeed, a third reported never taking a vacation.
The willingness to cut back on non-essential spending extends to entertainment and leisure activities, even including gym memberships and personal hobbies. Moreover, 25% chose to use public transport or carpool, while 12% opted to take on extra part-time work to increase their income.
The survey underscores the need for better financial education and points to resourceful personal finance management strategies employed by Americans. In spite of existing challenges, many participants expressed a sense of control over their financial future.