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Most Americans Don’t Have Written Financial Plans

By Alex Padalka May 17, 2018

Americans who have a written financial plan are far more likely to be able to cover their expenses -- even sudden ones -- and have better money habits overall, according to a recent report from Charles Schwab. But the majority don’t have a plan — and many don’t even think their wealth deserves one, the report found.

Among people who have a plan, for example, 75% manage to both pay their bills and save every month, compared to 33% among those without a plan, Schwab found. And 65% of planners have an emergency fund, compared to 24% of non-planners, according to the survey of 1,000 Americans aged 21 to 75 conducted in January. Meanwhile, 68% of non-planners live paycheck to paycheck, although 38% of planners do as well, Schwab found. But 62% of planners feel financially stable while only 32% of non-planners do, according to the survey.

At the same time, however, only one in four Americans actually has a written financial plan, Schwab found. Forty-five percent of survey respondents without a plan say they simply don’t have enough money to merit a plan, while 20% say it just never occurred to them to have one — and 20% don’t know where to start to get a plan together, according to the survey.

“The idea that financial planning and wealth management are just for millionaires is one of the biggest misconceptions among Americans, and one of the most damaging,” Joe Vietri, senior vice president and head of Schwab’s retail branch network, says in a statement accompanying the report.

Financial advisors may have more receptive prospects in younger generations. Among millennials, 33% have a written financial plan, compared to 20% among Generation X members and 22% among baby boomers, Schwab found. And 36% of millennials have specific savings goals, compared to 25% of Gen Xers and just 17% of baby boomers, according to the survey. Meanwhile, only 22% of millennials are likely to work with a financial advisor, although that’s only slightly below the 25% of baby boomers who are and far above Gen Xers, only 16% of whom are likely to have an advisor, Schwab found.