“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 = budget

For 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.

“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 = budget

For 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.

Those of us with children in public schools know that the schools teach to the standardized tests. The best way to teach children the basics of financial literacy would be to add it to the standardized tests. Even without that incentive, many schools try to impart financial literacy, often in partnerships with nonprofits such as Junior Achievement.

Byford, the Oklahoma CPA and Certified Financial Planner who doesn’t think the poll respondents were entirely truthful, says schools “absolutely” should teach the basics of personal finance, starting with budgeting. She was pleased recently when her middle school-aged son got such a lesson in math class.

Her son drew a career out of a hat — a job as a nurse, making $54,000 a year. For his math assignment, he had to figure out how to get by without blowing his virtual budget. “He had to find a house that he could afford,” Byford says. “He had to buy a car that he could afford. Also, he was married, with a wife that worked, and he had two kids. So he had to provide day care for those kids.” He had to factor in the cost of utilities and other expenses. “It was a big math problem,” Byford says.

After taxes and expenses, Byford’s son had money leftover at the end of the month. “He said, ‘Oh, I can get a pet!’ A small dog was $10 a month and a large was $25. It was a great teaching tool about what things cost and the choices you have to make — what you have to do without. I know it helped him see the choices that our family has made.”

Byford is senior vice president of Stillwater National Bank in Oklahoma City and a registered principal for Raymond James Financial Services, as well as being chairwoman of the personal financial planning committee of the Oklahoma Society of CPAs. The organization sends members into classrooms to talk about budgeting, saving for retirement, the time value of money, the power of compound interest — “very basic concepts of starting out early, and the earlier the better,” Byford says.

Where to get budgeting help

As for adults who are perplexed about the basics of financial literacy, there are many resources in books and online. A groundbreaking book in the budgeting genre is “Your Money or Your Life,” by Joe Dominguez and Vicki Robin, who describe how to account for every penny that comes in and goes out and how to keep spending under control.

Bernstein says, “These ‘Dummies’ books are quite good on this stuff” — such as Eric Tyson’s “Personal Finance for Dummies.”

As for Web sites, the federal government has MyMoney.gov. Most discount investment brokers have personal finance tutorials. And keep your eye here on Bankrate.com, which will publish a guide to financial literacy each month, shining a light each time on a different corner of personal finance. To be notified of the new guides, sign up for an alert.

Who knows? Maybe someday a pollster will call and ask if you abide by a budget, and you’ll say yes — and be telling the truth.

The telephone poll was conducted for Bankrate by GfK Roper Public Affairs & Media among a national sample of 1,014 adults, Dec. 26-30. Results based on the entire sample have a sampling error of plus or minus 3 percentage points. Results based on subgroups have a larger sampling error.

What’s your experience with budgeting? Are you struggling? Successful? Share your story.

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