Many Are Focused on Controlling Their Personal Finances, Yet Two in Five Admit to Making No Changes in the Past Year
According to the survey of U.S. Homeowners, fear of unemployment and the state of the job market most influence homeowners’ concern over their financial situation. Similarly, job-related improvements would most instill their confidence in the economy. Yet, when asked how they are conducting their personal finances, two in five homeowners (38 percent) say they have made no significant changes in the past year, saying they “don’t have a need” as the primary reason.
Many other homeowners say they’re spending less. Thirty percent of homeowners say in the past year they’ve paid down debt and 25 percent say they’ve learned how to better manage their budget on their own. Compared to a year ago, homeowners are spending even less, with at least 50 percent reducing what they spend on entertainment and vacations, 50 percent looking for the lowest prices and about two in five homeowners (37 percent) purchasing only what they need.
“Homeowners are worried about their jobs and debt is still historically high, however many people may not be making the necessary changes to improve their finances,” says Jamie Moldafsky, of the Wells Fargo Home Equity Group and a lead for the company’s Smarter Credit™ initiative, an effort to educate consumers on the use of credit. “It’s encouraging to know there are many homeowners trying to manage the factors they can control – like spending, budgeting and handling their personal debt – especially when they’re unsure about the economy.”
Younger homeowners, ages 18 to 41, seem to be more unclear as to what to do than older homeowners, ages 42 and older. For those who say they haven’t made any major changes in their financial behavior, 60 percent of respondents ages 18 to 41 say something else is holding them back compared to 27 percent of those who are 42 and older. Nearly one quarter of younger homeowners (24 percent) say it seems pointless given their financial situation while another 22 percent seem to be procrastinating, saying they “plan to but haven’t started yet.” The rest either don’t know how or what to do (10 percent), don’t have the time (6 percent) or don’t want to even though they should (2 percent).
The survey also shows that younger homeowners are not as educated as they would like to be about how to effectively establish and use credit. Thirty-five percent of homeowners ages 18 to 29 and 19 percent of those ages 30 to 41 say they have not recently sought information on how to get and improve their credit but wanted to do so; this is compared to just 11 percent of homeowners ages 42 to 60 and only 3 percent of those ages 61 and over.
“The silver lining of this economy seems to be the changes to more financial healthy behavior,” says Moldafsky. “When homeowners were asked if they plan to make specific changes in their spending short-term, while the economy is in a recession, or long-term changes after the economy has recovered, 77 percent of homeowners who are purchasing only what they need plan make it a long-term behavior. A large majority of those who are price shopping, teaching children about managing finances and budgeting consider these to be long-term changes in their lives.”
Smarter Credit™ approach can help
To educate consumers and help them control their finances, the Wells Fargo Smarter Credit center (www.wellsfargo.com/smarter_credit) provides tools to assist customers in paying down debt. These resources are especially critical given that 80 percent of homeowners are living with debt (excluding their mortgage) and about two-thirds (63 percent) think about their debt at least once a week, while two in five (44 percent) think about it every day.
- Debt Pay Down Solution® -- www.wellsfargo.com/paydown, a simple three-part program that can help Wells Fargo customers pay down debt. First, customers consolidate high-interest rate debt to help reduce their monthly payments through a Wells Fargo personal loan. Second, customers use My Spending Reportwith Budget Watch to identify “What's Left” (deposits minus spending) each month. Finally, customers can transfer “What’s Left” to the principal balance of the new loan to accelerate the pay-down.
- My Spending Report with Budget Watch: A patented, free online money management tool that categorizes transactions and enables customers to track their spending by category, so they can identify opportunities to spend less. It also helps customers create a budget in as few as two clicks and monitor their progress throughout the month - delivering the information customers may need to stay on budget and gain more control of their finances.
- Compare Wells Fargo Debt Management Solutions -- www.wellsfargo.com/help/tools/debt_consolidate, an online tool that is designed to suggest financial products that may fit the borrower’s specific need and budget based on a series of questions such as the primary reason for wanting to consolidate their debt, types of debt that need to be consolidated and the amount the customer would need to borrow.
The survey, conducted for Wells Fargo by marketing research consultancy Ipsos Marketing, polled 1,600 homeowners this past June across the United States about their attitudes and behaviors toward debt and their use of credit. This is the second in a series of quarterly surveys this year and the sixth year that Wells Fargo has surveyed homeowners.
Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.