Study: Americans are fine with their overspending

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Most Americans at least occasionally spend more than they make. But they're mostly OK with that.

Those are the findings from a new survey conducted by COUNTRY Financial. The May 2012 COUNTRY Financial Security Index indicated that while 52 percent of respondents spent in excess of their monthly income in at least a couple of months of each year, only 9 percent said their lifestyle is more than they can afford.

Families make budgets but don't stick to them

On a positive note, the survey found 51 percent of respondents had a household budget in place. However, it appears that many have difficulty following it every month.

"Half of Americans have taken an important first step in setting up a budget," said Keith Brannan, vice president of financial security planning for COUNTRY Financial, in a statement. "But, a budget is only helpful if it's realistic and tailored to your situation."

Unfortunately, having a budget isn't necessarily the same thing as following a budget. Budget shortfalls occurred at least six months out of every year for 21 percent of respondents.

'Perception gap' clouds problem

COUNTRY Financial identified a "perception gap" between how individuals view their finances and their actual spending habits.

Perhaps because most families have a budget, they don't see their overspending as a problem. To compensate for excess expenses, those surveyed used a variety of tactics:

  • Used money from a savings account: 36.2 percent
  • Used a credit card: 21.7 percent
  • Delayed bill payments: 12.3 percent
  • Borrowed money : 7.8 percent

Of the 21 percent of survey respondents who reported regularly having monthly expenses in excess of their income, only 13.5 percent adjusted the next month's spending to get their finances back on track.

Missed savings goals

In addition to overspending their budget, many Americans also say they are missing their savings goals. According to the survey, 61 percent of budgeters and 30 percent of non-budgeters create a monthly savings goal. However, of those, 57 percent of budgeters and 54 percent of non-budgeters say they meet their goal only half of the time or less.

Brannan says families must be careful to keep their savings account balance healthy, especially considering how many dip into their emergency funds to pay excess expenses.

"While savings keep you financially secure, you must replenish them," Brannan said. "Try to avoid using credit cards to cover excess spending. If possible, anticipate larger purchases and upcoming bills, and schedule payments around your income."

For families who find they are dipping into their savings account for discretionary purchases, moving their funds to a less accessible, but still liquid, account may help curb the urge to spend. Money market accounts with limited check writing abilities are one option to consider for this.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Banking and Loans

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