If you think you need to get your finances in order but haven’t taken any action to address it, you are not alone.
Some 58% of Americans think their financial planning efforts need to be improved, but 34% of us have done nothing to plan for our financial future, according to a study recently released by Northwestern Mutual.
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The study is based on an online survey of 5,474 US adults aged 18 and older, conducted earlier this year by Harris Poll on behalf of Northwestern Mutual. The survey results were weighted against the US Census Bureau’s goals for education, age and sex, race and ethnicity, and region and household.
According to Northwestern Mutual, the results show that there is a huge disconnect between what Americans know they should be doing when it comes to finances and what they actually do. For example, two-thirds of Americans (67%) consider themselves to be “savers,” but more than half of us (54%) have debt equal to or greater than our savings.
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While many Americans worry about having enough money in retirement, it seems only a fraction of us seek help when it comes to planning for retirement.
According to the study, two in five Americans (43 percent) have “told no one”, including friends and family, about retirement planning. In addition, 21% of Americans are “not at all convinced” that they will be able to meet their financial goals.
For some financial advisers, the study’s findings are distressing but not really surprising. Sean Michael Pearson, certified financial planner and advisor at Ameriprise Financial Services, said many Americans are overwhelmed by the glut of financial information they have to sift through in order to make decisions for themselves.
Setting priorities is the key
“People often have the impression that there is too much information available because of the internet,” he said. “The overload of information makes many people nervous about making mistakes.”
One way to overcome such reluctance, Pearson said, is to set your financial priorities first, such as setting goals for saving and paying off debt. Then, determine the steps you need to achieve those goals.
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“No one goes into Home Depot and tries to find the best tool without first knowing what type of project they are doing,” he said. “People usually say, ‘This is my project and what’s the best tool to do it? ”
“It’s the same premise you should be using when it comes to financial planning,” he explained.
Americans are busy people, Pearson said, and many of us feel like we’ve failed before when it comes to saving money and taking other steps to improve our finances. As a result, some of us develop a fatalistic attitude.
Pearson added that “if people feel like they’re late it can be very deflating, and they can be like ‘Why start now?'”
“My answer to this question is that the best time to plant the tree was 20 years ago, but the second best time is today.”
“There is always a positive way to go,” he said. “All the decisions people make, if they follow a plan, are better than the decisions left hanging. ”
Yet a growing number of Americans are content to hope for the best.
According to the Northwestern Mutual survey, the number of Americans aged 25 and over who identify as “non-planners” and having “no financial goals set” doubled to 14% between 2012 and 2015.
The survey found that “an unforeseen financial emergency” is what Americans fear most when it comes to money matters. Still, those who think their financial planning efforts need to be improved would be more motivated by “a cash windfall” to take action, according to the survey.
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“This is sad news for all of us,” said Micky Reeves, CFP and wealth advisor at Buckingham Asset Management.
“Too many people think you need wealth first and financial planning second,” he added. “It’s completely upside down. Good financial planning will lead people to wealth creation.”
Many Americans who already have financial plans are not fully convinced that these plans will hold up for the long term. According to the survey, nearly one in four Americans don’t think their financial plans can withstand the inevitable ups and downs of the economy.
This discovery, said Reeves, demonstrates how important it is for advisors to gain buy-in from their clients when it comes to financial plans. After all, even well-designed financial plans don’t really help if clients aren’t sticking to them, said Reeves, who coaches other advisers.
“There are a lot of advisors who are brilliant from a technical point of view, but they talk to their clients and therefore don’t do much to get things done and help the clients to progress,” he said. declared. “If we as advisors are to help clients improve their financial security, we have to be great educators and motivators. “
—By Anna Robaton, special for CNBC.com