Grading Ourselves: Many Americans Concede Their Finances Need Work

October 15, 2008 10:04 AM EDT

NEW YORK--(BUSINESS WIRE)--

Many Americans say they are concerned about their finances--and the folks most worried are those least likely to be receiving professional financial advice.

With the economy struggling, 56% of those under age 65 say they aren't comfortable with their ability to cope financially if they couldn't work for six months, according to a recent survey of 5,000 people conducted for myFi(sm), short for "my financial life," a new financial service from Citi. myFi is a part of Citigroup Global Markets Inc. (member SIPC).

The myFi Financial Wellness Survey also found that, among all respondents:

* 34% aren't confident their job is secure and that their income will
   rise over time.
* 32% doubt they have the right insurance coverage if they were to
   become sick or disabled.
* 50% aren't confident they're saving enough toward their financial
   goals.
* 42% aren't comfortable they own the right mix of investments.
* 33% aren't confident they can maintain their current standard of
   living.
* 43% aren't comfortable with their ability to cope financially if the
   markets suffered a big decline.
* 41% are uncomfortable with the amount of debt they have.

"A sizable group of Americans could do a better job handling their finances--and they know it," says Jonathan Clements, myFi's Director of Financial Guidance. "They realize they aren't saving enough, they have too much debt and they don't have the right insurance."

The survey results indicate that Americans are hampered by the weak economy and their own behavioral mistakes, not a lack of financial education. In fact, an impressive 71% report being comfortable with their understanding of financial issues.

Research has found that men are typically more confident than women when it comes to managing money. Sure enough, in the myFi survey, 40% of men say they are completely or very comfortable with their understanding of financial issues, versus 34% for women.

"Most people have a pretty good idea what they ought to be doing with their money," Clements says. "But we still make all these behavioral mistakes, including saving too little, panicking when the market goes down and procrastinating over crucial financial decisions. Without some handholding, it's hard to stay on track."

While Americans from all walks of life expressed discomfort with their finances, the concern was especially pronounced among three key groups--those under age 45, those with incomes below $50,000 and those who don't have college degrees.

"These demographic groups don't just need help with their stocks and their mutual funds," Clements says. "They need help with their entire financial life, including their debts, their insurance and their homes. These are the Americans who really need financial coaching."

Not all the news is grim. Americans may be struggling with their finances, but they seem to be making the most of the money they have. Among all respondents, a hefty 80% say they're confident they are devoting their money to the things that are most important to them and their families.

The figure was especially high for older Americans. Academic research has found that people grow more content as they grow older, and this was also reflected in the myFi survey. Among those 65 and older, 92% say they're confident they are devoting their money to the things that are most important to them and their families.

The myFi Financial Wellness Survey was conducted online by Synovate in 2008. The 5,000 respondents assessed their comfort level on 14 financial issues, using a scale of 1 (completely uncomfortable) to 6 (completely comfortable). Additional data is available upon request.

myFi is a business of Smith Barney, a division of Citigroup Global Markets Inc. (member SIPC), and part of Citi Global Wealth Management. myFi is geared toward helping everyday people understand and take control of their entire financial lives. To learn more about myFi, go to www.myFi.com. The Global Wealth Management division at Citi comprises two of the most respected brands in wealth management: Citi Private Bank and Smith Barney. Citi Global Wealth Management is a top-tier global wealth manager providing some of the best institutional capabilities available today. Serving both private and institutional clients, Citi Global Wealth Management taps the strength and resources of Citi to maximize value and service.

Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.

Sourcing: For more on the overconfidence of men versus women, see Brad Barber and Terrance Odean, "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment," Quarterly Journal of Economics, February 2001. Meanwhile, for a discussion of happiness among older Americans, see Keith Bender, "The Well-Being of Retirees," Center for Retirement Research Working Paper 2004-24, Boston College, November 2004.

Source: Citigroup Inc.

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