In something of a surprise, new research sponsored by the Consumer Federation of America and Certified Financial Planner Board of Standards finds close to nine in ten American households are engaged in some type of formal or informal financial planning.
However, the extent of this planning varies greatly, and will generally fall into one on four behavioral areas identified by the organizations: comprehensive planners, basic planners, limited planners and non-planners.
The research shows that only one in five household decision makers are comprehensive planners, or those who take a methodical approach to financial planning, while one in ten do virtually no financial planning at all. The research further identifies nearly two-fifths of households as basic planners and one-third of households as limited planners.
“I was most surprised by the number of Americans involved in planning,” said Stephen Brobeck, CFA’s executive director. “Yes, the degree to which they’re planning does vary, but I thought the number of people that do not do any planning would be much higher.”
One of the most compelling findings, according to Brobeck, is 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. That in turn leads to higher effectiveness in saving, investing, and debt management, as well as higher confidence in managing their finances.