NEW YORK (Reuters) - Americans who have a financial plan of any sort not only feel more confident and are more optimistic about their futures, but are also saving more and getting into financial trouble less than those without a plan, according to a new survey.
The report comes from the Certified Financial Planner Board of Standards, Inc., which represents more than 60,000 financial planners. But even though the CFP Board has the vested interest of professional advisers at heart, the survey was “not specific about how that plan was created,” said Kevin Keller, chief executive of the CFP Board.
The purpose, he said, was to assess the value of financial planning more globally, the survey and was co-sponsored by the Consumer Federation of America, an advocacy group.
“It’s understood that planning can be useful even if a family doesn’t secure the services of a trained professional. Just sitting down at the kitchen table and thinking about one’s finances can be very helpful,” said Stephen Brobeck, executive director of the CFA.
Nevertheless, it’s still a challenge to get people into planning mode. Only 31 percent of respondents said they had a comprehensive financial plan, defined as a written document that includes saving and investment strategies. A greater number, 63 percent of respondents, indicated they follow a plan for at least one of their savings goals.
As expected, the percentage of consumers with plans was highest in the $100,000-plus income bracket, with 55 percent having a comprehensive plan in contrast to 35 percent in the $50,000-$99,999 bracket. The high earners with plans were the most likely to say they live comfortably. Also, 100 percent of them have retirement savings, 92 percent have emergency savings and 73 percent are saving 10 percent or more of their income annually.
While the high earners outranked those in the $50,000-to $99,999 bracket in all those categories, Broback and Keller pointed out that those in the moderate income bracket with financial plans did better in some categories than those who make more than $100,000 but had no financial plan.
For instance, of those in the $50,000-$99,999 bracket who had a plan, 40 percent had 10 months or more of emergency savings, while of those in the higher bracket who had no plan, only 36 percent had at least 10 months of emergency savings. The same pattern applied to paying off credit card bills each month (45 percent to 41 percent), and never having declared bankruptcy (90 percent to 85 percent).
In addition, more respondents in the $50,000-$99,999 bracket who had a plan said they lived comfortably than did those in the top bracket who had no plan (50 percent to 47 percent); were more confident managing money (47 percent to 34 percent); and were more likely not to feel behind on any specific goal (46 percent to 35 percent).
“Those with a comprehensive plan, regardless of socioeconomic status, do better as a result, regardless of whether they paid for a plan or not,” said Keller. “People who plan feel better than those who do not.”
Follow us @ReutersMoney or here; Editing by Linda Stern and Leslie Adler