WASHINGTON (7/10/13)--Many credit unions with financial education components are aware of surveys that indicate consumers lack the financial knowledge to make sound money decisions. Yet another survey drives home that point. This time, the poll found 57% of consumers surveyed misunderstand the purpose of a budget.
Consumers polled view a budget as a restriction, not a reflection of priorities, said the National Foundation for Credit Counseling (NFCC), which conducted the poll on its website.
"A budget actually provides the structure through which a person can be in charge of his or her spending, directing the dollars to their best use," said Gail Cunningham, NFCC spokesperson. "Spending should be a reflection of a person's priorities, but without a plan, the priorities often get pushed aside in favor of the tyranny of the urgent."
The reluctance to construct a budget suggests people may be afraid to face the financial facts, choosing instead to allow the most pressing financial need or urge of the moment make that decision for them.
That means credit union financial educators will need to explain even more about setting and following budgets. NFCC pointed out that a spending plan provides a number of benefits. Credit unions can use this list to add to their own financial education arsenal. When educating members about budgets, be sure to explain that a spending plan:
Credit unions can find a host of financial education materials, including resources for budgeting on the Credit Union National Association's website, in the Home and Family Finance Resource Center. Use the links.
Instead of being restrictive, a budget often creates more money by use of smart spending choices, said NFCC. It suggested starting out by tracking spending for one month.
"It's a shame that budgeting has a negative connotation," said Cunningham. "Everyone needs a spending plan, but when times are tough, a budget is even more critical. When every penny counts, it's important to count every penny."