Friday, August 15, 2008

New Picture of Personal Finances Shows, in Case of Emergency, Two in Three ''Household CFOs'' Are at Risk

BUSINESS WIRE --A recent national survey of “Household CFOs” - people who are primarily responsible for the financial management of their household - reveals that a majority are not adequately prepared for short-term financial setbacks or long-term financial needs like retirement. In fact, 68 percent of households do not have emergency savings accounts, putting them at financial risk in the event of a crisis.

The survey was conducted by Consumer Credit Counseling Service (CCCS) of Greater Atlanta, a national credit counseling agency that has been educating consumers on money and debt management, housing, and bankruptcy and foreclosure prevention since 1964.

In response to survey findings(a) and current economic conditions, CCCS is launching a national awareness campaign, “Household CFO,” and enhancing its CredAbilityU online education program to offer free, easy-to-use interactive webinars and financial management tools.

“The time and energy it takes to manage the day-to-day leaves little time for thinking about what lies ahead. People often become overwhelmed and forget to include savings and long-term planning in their budget. But, it’s essential,” said Mechel Glass, director of education for CCCS. “We launched the Household CFO campaign to share what we’ve learned in our 44-year history, encourage proactive financial education and help individuals better prepare for financial stability.”

Survey results showed that Household CFOs recognize the importance of financial planning and are comfortable with daily financial management tasks. However, respondents were more likely to rate their knowledge of more complicated and long-term financial preparations as “Average” or “Below Average.” In fact, one in six respondents do not have any financial goals or long-term plans in place, such as a budget, retirement plan, investment portfolio or any kind of savings, and nearly one in three households has not prepared a will, purchased insurance of any kind or made other preparations for a significant life-changing event.

“A long-range financial plan is particularly critical during times of economic uncertainty like the present,” said Ilyce Glink, nationally-syndicated personal finance and real estate journalist and member of the National Advisory Council for CCCS. “A general guideline is to save 10 percent of net income and have 6 months income available in an emergency fund or savings account. But if saving 10 percent of your net income seems impossible in a time where gas prices are rising, try to set aside five percent and build in an extra one percent each month until you've reached that 10 percent threshold.”

Though many aren’t prepared, nearly half of survey respondents experienced extenuating circumstances within their household in the past 12 months that negatively affected their finances. Almost one in three experienced a medical emergency or a change in health status. One in six reported a job loss, and one in ten went through a divorce.

“With free resources available to Household CFOs, it’s easier than ever to become more knowledgeable about managing finances in their own time and at their own pace,” said Glass. “Through courses like 'How do I save my home?,' 'Why am I a 678 credit score?,' and 'Living on 70 cents a day,' Household CFOs can easily build their confidence while building financial stability for the future.”

Glass recommends the following Web sites as resources for effectively managing household finances: - Free webinars and financial management tools via CredAbilityU, including mortgage calculators and budget trackers - Useful news, tips, advice and information from Ilyce Glink, financial expert, regarding personal finance, real estate and consumer issues – Credit score reporting and education - Free annual credit reports - (Mutual Fund Investor’s Center) Basics on investing in mutual funds

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