The FINANCIAL -- As they look ahead to 2014, Americans are getting their financial houses in order by paying closer attention to their credit scores and managing their debt, according to the inaugural “How America Buys and Borrows” survey by Wells Fargo & Company.
The survey revealed that Americans are focused on managing their credit, with nearly 60 percent having checked their credit score or credit report within the past year. On average, more Americans are proud (40 percent) than concerned (22 percent) about their credit score. This focus on credit management is part of preparation for the future, as nearly 80 percent of respondents said they have purchases of $2,000 or more planned within the next two years. In the coming years, consumers anticipate financing purchases such as home improvements or a home purchase (41 percent), travel (32 percent) and automobiles (28 percent), according to Wells Fargo.
“77 percent of Americans feel their financial situation is moderate to good – which is great news as we move ahead to 2014,” said Gary Korotzer, executive vice president with Wells Fargo’s Consumer Credit Solutions Group. “It is important for consumers to put themselves in the driver’s seat when it comes to managing their finances responsibly. An optimistic outlook for the future is an important key to financial success along with having clear goals and charting a course to get there,” he added.
The survey also uncovered generational differences in how consumers choose to manage or strengthen their financial situations. Boomers and Gen Xers are more likely to say they actively reduce their debt (42 and 35 percent, respectively,) while 35 percent of Millennials say they choose to focus on increasing their savings.
The survey also revealed that consumers are engaging in healthy fiscal habits such as paying off their credit cards every month (39 percent,) saving for major purchases rather than relying on credit (38 percent) and sticking to a budget every month (32 percent.)
“We want our customers to take charge of their finances by understanding their current situation and their options. When used responsibly, credit is a resource that can help consumers reach their financial goals. And we believe Wells Fargo has an important role in providing tools and resources to help our customers succeed financially,” said Korotzer.
43 percent of Americans think things will get better in the next year. 44 percent think things will stay about the same. Most believe housing values have bottomed out and expect values to stabilize or increase. Boomers are more likely to feel the economy is weaker and Millennials are more positive about the future. Millennials expect their current situation will improve (60 percent), yet one third are concerned about finding a stable job and paying off loans. Saving for retirement is a leading concern for both Gen X and Boomers with 52 percent of Gen Xers and 53 percent of Boomers saying it’s their top concern. Three in 10 feel they’re saving more compared to a few years ago, or reducing debt. However, few (one in five) indicate they are financially prepared for an emergency. When financing a purchase, the total cost of the item is the most important consideration, followed by the interest rates on credit cards or other loans. Nearly a third of American homeowners indicate that, with the exception of a mortgage, they are living debt free. One in four respondents consider themselves “financially savvy,” and the same number feels that they are doing a good job keeping their financial house in order. Few (13 percent) feel they have achieved their financial goals and most rate their understanding of financial management a “B” or a “C”, according to the report.
As consumers plan for 2014, Wells Fargo offers the following five tips:
Develop a realistic budget that includes your income, expenses, saving for life’s special moments and allowances for life’s unexpected moments.
Manage your cash flow and savings by tracking spending, reducing debt, saving for emergencies and avoiding overspending.
Build for the future by setting financial goals and living within your means. Create a financial plan to help you reach your goals and be prepared to adjust it if your life circumstances change.
Maintain strong credit and understand the real cost of borrowing. Know your credit score and check your credit report for accuracy annually. Before financing a big ticket purchase, understand the total cost of the loan over time.
Protect the money you have by avoiding becoming a victim of fraud or identity theft by safeguarding your personal information, reporting lost or stolen items such as checkbooks, debit cards or credit cards immediately and regularly reviewing your accounts to confirm all activity is legitimate.