"What's unique about Americans is, even if they're going through a difficult period, if they believe things will get better, they spend based on their perception of the future rather than the present," says Manning, a research professor and director of the Center for Consumer Financial Services at the Rochester Institute of Technology.
Progress is fine, but it has pitfalls, too. Just as e-mail and text messaging erode capitalization and punctuation, the growth of the credit industry has made budgeting passe. "The easy access to credit means the average American doesn't need to budget any longer, because they can always borrow to meet their needs," Manning says.
When income = budgetFor a lot of people, excessive borrowing leads to a session with a credit counselor. Brad Wallin used to counsel debtors for Money Management International. Now he's a regional director of education for the Centers for Financial Education, an arm of MMI. From his credit counseling days, he remembers that many debtors lived in denial.
"Perception is not always reality for these folks," he says. "People who say they work out a monthly budget? I ask for it, and they say, 'I keep it up here.'" Wallin taps his temple. A lot of people, he adds, think, "Whatever my income is, that's my budget."
Bankrate's poll shows that most people think it's important to have a family budget, and experience says that a lot of people don't. We know that a lot of people lose by not budgeting. Who gains?
"Anyone who benefits from people who spend beyond their means," Bernstein says. That starts with retailers but doesn't end there. "Credit card companies have got to be the biggest winners here because their interest rates are so much higher than bank loans or auto loans," Bernstein says. "For people who are spending beyond their means, and doing it impulsively, they're likely to be using credit cards over any other form of borrowing."
Manning says the mortgage industry made out like bandits as lenders marketed exotic home loans with variable rates, interest-only payments and even negative amortization. "It was a great time to pay off debt, but people added debt," Manning marvels.
If sticking to a budget keeps you from going too far into debt, how and where do you learn to work up a budget? Experts say that this corner of education should start at home, where parents can bestow allowances, teach deferral of gratification and talk about money. And, experts say, the basics of financial literacy should be taught in school. Budgeting is the most fundamental concept.