Two-thirds of middle class Americans acknowledge having made financial mistakes, the cost of such errors averaging $23,000, according to a new study.
Primerica, Duluth, Ga. and the Consumer Federation of America, Washington, D.C., published this finding in a summary of results from a new report, “The Financial Status and Decision-Making of the American Middle Class.” The analysis includes a national survey of 2,015 adult Americans by ORC International in July of this year and a statistical examination of the Federal Reserve Board’s 2010 Survey of Consumer Finances.
According to the report, two-thirds of middle class Americans (67%) say they have made at least one “really bad financial decision.” And nearly half of those questioned (47%) acknowledge they had made more than one bad decision.
The typical (median) cost of these bad decisions was $5,000, but the average cost was $23,000.
Few of these Americans say their main source of information or advice about specific financial decisions would be from the Internet, books, magazines or TV. And a number said they would not seek information or advice in making these decisions.
For example, for “saving and investing,” only 15% say they would rely on the Internet, publications or TV for the information. Another 17% say they “wouldn’t seek any information or advice, and just make a decision.”
However, for this kind of decision, 45% say they would use information and advice from a financial professional.
These middle class Americans are more risk-averse than those with higher incomes. If given $1,000,000 to invest for retirement, only 21% of middle class Americans, compared to 48% of higher-income persons (incomes $100,000 and over), would invest mainly in “stocks, bonds, and/or mutual funds.”