What Type of Planner are You?

Yesterday, the Consumer Federation of America and the Certified Financial Planner Board of Standards released new research that shows that close to nine in ten American households are engaged in some type of formal or informal financial planning but the extent of this planning varies greatly.

The study identified four distinct financial planning profiles that include all American households:

  • Comprehensive Planners (19%): All members of this group have a comprehensive financial plan that goes beyond a simple household budget to cover things like retirement savings and insurance. These households have specific savings goals, with 88 percent having a specific plan for retirement and 80 percent having a plan for emergency savings.
  • Basic Planners (38%): The large majority of basic planners (80%) have a plan for one or more specific savings goals, though only 35 percent have a comprehensive plan that organizes these plans, with another 31 percent saying they are likely to make a plan in the coming year.  While two-thirds (66%) say they have a household budget, fewer than half (41%) say that budget is written down or stored in electronic format.
  • Limited Planners (33%): A large majority of limited planners (69%) either have a household budget or a plan to address at least one individual savings goal – typically for retirement savings – but not both.  And very few limited planners (11%) think they will make a comprehensive plan in the next year.  But most (91%) either have no credit card debt or have a plan to pay off this debt.
  • Non-Planners (10%): This group does virtually no financial planning. Nine in ten (92%) say they have no plan for any specific savings goal, and virtually none (99%) think they will create a comprehensive financial plan in the next year.  They also are the group with the most difficulty managing credit card debt.  Four in ten have credit card debt that needs to be paid off and fewer than half with this debt have a plan to pay it down.

The study also found that the more extensively households plan:

  • The better prepared they are financially in terms of their likelihood of saving, investing, and managing credit card debt.
  • The higher the effectiveness of this saving, investing, and debt management.
  • The higher their confidence in managing their finances.

Find yourself in the limited planner or non-planner category or want to take charge of your finances? Take the first step by choosing a savings goal and making a plan to save by Pledging to Save today. When you pledge to save you can choose to receive monthly emails or text messages to help you stay motivated.

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