Lisa Simpson
Aug 4,2009
In: Finance

At This Critical Juncture it Would Help Americans to Opt for Financial Dieting

financial-diet

At this critical juncture it would help many Americans to opt for financial dieting as they have become unfit as far as finances are concerned. Consumers are in debt touching record numbers. The savings numbers are the lowest in the last 25 years. In 2004 the number of personal bankruptcy filings broke records.

The statistics are grim but the majority of the citizens are saying that they are managing very well in controlling their spending habits. Recently a Gallup poll was taken covering 1,010 individuals. One out of five opined that they should improve their financial dealings. Ben Stein writes on economics and finance. He said, “It’s a very, very scary situation in terms of what Americans do not know. It’s childlike. Like a child who thinks his parents are always going to bail him out. But at some point, they aren’t.”

The financial gurus are concerned that the Americans, weighed down with heavy debts, increasing costs in medical care and education are not doing as much as they should. Another point of worry is that changes in social security benefits are just waiting to happen. Today the mantra should be to save more and to spend less. What is imperative is the imposition of financial diet on the people.

Dan Houston of Principal Financial Group said, “Somebody had better get loud about this in a hurry. Saving for retirement is the No. 1 issue. So many Americans have let that slip, replacing it with plasma televisions, new cars and houses two-thirds bigger than what we need.”

In the age bracket covering 45 to 54, only 25% have individual retirement accounts – as on 2003. The mean balance was a meagre $13,000. The problem is diffusing income lines. Those whose earnings are less than $20,000 annually have a mean balance in their IRA’s of $8,000. Those whose earnings are from $50,000 to $75,000 have a mean balance of $10,000. This is as per the findings of Employee Benefit Research Institute.

The Financial Planning Association is the largest body comprising of planners and advisers. The group was tough in their remarks stating that the Americans were indulging in overspending and “living beyond their means.” This is the primary problem of those who are now in distress. The second problem is that they have hardly saved anything to tide over a crisis period.