Poll: How well do Americans keep track of their finances?

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Everybody knows they should be better about their financials by saving money on a monthly basis, sticking to a dedicated budget and investing money in areas that offer a return. However, putting these financial goals into practice is not always easy. To better understand where Americans sit on financial maintenance habits, we polled over 5,000 people asking them questions about their approaches to saving, tracking and investing their finances.

Here’s what our survey found about how Americans manage their finance:

  • 43 percent aren’t saving money at all, and 1 in 4 puts most of their savings in a savings account, which yields little long term profit.
  • 52 percent of people rebalance their stock portfolio more than once per year, which incurs unnecessary fees and negative tax consequences.
  • 27 percent of Americans have more than three open lines of credit.

Though 43 percent of Americans say they don’t save money, of the remaining 57 who are, nearly a quarter reported that they save the majority of their money in a savings account. Savings accounts are easy to contribute to and flexible, allowing you to draw from the account at any time. However, savings accounts often have a low annual interest rate which will not offer a return on investment. Most interest rates offered by banking institutions are under the 2 percent inflation rate in America, meaning any money that is sitting in a savings account is devalued by inflation.

11 percent of Americans are investing in mutual funds which are are stock investment portfolios that are managed by a professional. Mutual funds include 401k programs that are setup to offer a certain percentage of return which is considerable for the minimal input time. Without the worry of managing a portfolio and keeping up with the stock market, many Americans can invest without the stress.

Generation Z tended to save their money in stocks and savings accounts and only 3 percent invested in real estate. With a high upfront investment cost, it does not come as a shock that Generation Z has not accrued enough wealth to invest in the real estate industry. Millennials tended to be the most diversified with 20 percent of respondents in each category. Men were shown to be more likely to primarily save their money in stocks than women were and women were more likely to primarily save their money into a savings account than men.

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Generation Z reported that they did not invest money in bonds and certificates of deposit. Bonds and certificates of deposit are a low risk way of parking cash that you will not need over a long time period. Because this form of investing will pay out over a long period of time, it is best to invest in bonds and certificates of deposit early in life as they will mature over a 5–30 year period. Some bonds offer a competitive 5–6 percent return every year and some certificates of deposit can double in value over a longer time period. The prominent investors in bonds and certificates of deposit were those in the 55–65 age group.

On average, Americans are financially responsible when checking their bank accounts. With 66 percent checking their bank accounts daily to weekly it is easy for most Americans to keep track of their finances.

Our study found that women tend to check their bank account more on a daily basis whereas men are more likely to check their bank accounts on a monthly basis. For the 19 percent of Americans who check their bank account less than every month, catching overdrafts, improper charges and fraud can be difficult.

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40 percent of respondents reported they do not have any credit cards. A recent study by Visa showed a decline in credit card usage among Millennials, with credit cards accounting for just 27 percent total spend. Visa found that Millennials would rather use debit cards or cash to pay for expenses without having to be concerned about debt.

1 in 3 Americans have three or more lines of credit

Of the Americans that have credit cards, 43 percent have more than one credit card. Although it can be hard to keep up with multiple credit cards, many Americans are leveraging credit card loyalty programs and benefits. Along with a incentive to keep old or unused credit cards open to avoid any dips in your credit score and maximize your credit limit Americans are not closing old credit cards.

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Our poll found that an alarming 54 percent of Americans reported that they do not check their credit score. Millennials lead the pack on checking their credit scores more frequently, with 6  percent checking their numbers daily and 17 percent checking their numbers monthly. The best demographic were among 35–44 year olds, with only 46 percent reporting they did not check their credit scores.

Why do Americans check their credit scores so infrequently?

Many Americans are confused about checking their credit scores and think that checking their score will bring a penalty. Although credit scores are updated on a monthly basis when lenders report information to credit bureaus, checking in on your credit score more often will not lower it.

Even viewing your full credit report is only considered a soft inquiry, which also does not affect your score. It is only when lenders issue a hard inquiry into your account that your score can drop by some points.

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Of the 42 percent of people who reported having stocks, 39 percent said they did not rebalance. Investors who are not rebalancing could be made up of people that have a limited portfolio, do not manage their investments themselves, or are not diversified. Americans over the age of 65 were the most invested with 48 percent of respondents having stock holdings and Millennials were the worst with 68 percent of respondents not invested in the stock market.

Our study found that men were more likely to rebalance their stocks on a weekly basis than women. Investors rebalancing on a more frequent basis are more likely trading stocks that fluctuate quickly and have a higher long term risk.

Rebalancing a portfolio is necessary when your desired asset allocation becomes out of balance. This occurs either when one asset is performing higher or lower compared to your other allocated assets. Rebalancing assets will make sure your overall portfolio is even and true to your overall investment goals.

As many Americans are still working towards reaching financial goals, it is important for many to pick up new practices to saving and monitoring financials. No matter what financial goals you are working towards, it’s important to have a plan to get there.