Thursday, August 13, 2009

Schwab Study Finds People more Vigilant with Personal Finances

A June survey by Charles Schwab found

  • 51 percent of investors thinking of their finances daily.
  • Before the big market drop in 2008, only 27 percent thought daily about their finances.
  • Forty-five percent are committed to adopting stricter personal budgets.
  • Thirty-eight percent want to keep a closer watch on the economy.
  • Forty-six percent want to pay closer attention to what they save and invest.
  • One in four are considering changing financial advisers and brokers.
It would seem that it takes a significant market downturn to make people re-evaluate their finances. For the years prior to the crash, personal savings had been at all time lows, with Americans averaging somewhere close to no savings at all. That indicates to me that most people assumed that good times would go on forever - they'd never lose a job, the economy would continue moving forward, they'd never have an emergency that might require some of today's cash.

One lesson of the crash is that we should all consider worst-case scenarios. Example: is your car paid for? If not, and you lost your job, would you also lose your car due to an inability to pay? Debt introduces risk, making worst-case scenarios more devastating.

How has this economy changed your money habits?