Many in state spend in red, study reports

58% in survey have no rainy-day fund

Arkansans are struggling when it comes to financial stability and financial literacy, according to a study released this week by the FINRA Investor Education Foundation.

According to the 2012 Financial Capability Study, only 37 percent of Arkansans responding to the survey reported spending less than their household income and are able to save.

Twenty percent of Arkansans said they spent more than their household income and 38 percent said they are breaking even. The percentage of Mississippians and Arkansans spending more and saving less was about equal in the survey.

By comparison, 46 percent of the Californians who responded said they were able to spend less than they earned and save money. Results of the survey did not include the actual number of responses, only percentages.

Most personal financial problems come when people fail to realize how much they are spending, said Michelle Anderson, director of student life and leadership at Pulaski Technical College.

In the FINRA study, which is conducted every three years, the foundation surveyed about 500 people in each state, asking residents how they managed their money and made financial decisions. The foundation, a nonprofit research group based in Washington, D.C., is part of the Financial Industry Regulatory Authority.

“The thing most people, not just college students, have an issue with is spending plans,” Anderson said. “The reason for it is that we become very concerned about what people think about us and our lifestyles are eating out and fast-paced.”

Arkansans also fall below the national average when it comes to having backup funds to cover unexpected financial emergencies, according to the study.

About 58 percent of the Arkansans surveyed said they did not have savings to cover at least three months of expenses compared with 56 percent nationally. In Mississippi, 64 percent of the people surveyed said they did not have backup funds.

“Even though Arkansans and the nation are not doing a good job when it comes to a rainy-day savings, it is one area Arkansas has improved in the last three years,” said Gerri Walsh, president of the foundation. “Now it’s closer to the national average.”

She said 67 percent of Arkansans said they were without an emergency fund when the foundation first conducted the survey in 2009. The national average that year was 60 percent.

In the study, participants were also asked five financial literacy questions. Most Arkansans, about 67 percent, answered 3 or fewer of those questions correctly, compared with 61 percent nationally. Only Louisiana and Mississippi ranked lower.

Arkansans also performed poorly in the study’s other categories. Thirty-four percent said they had unpaid medical bills compared with 14 percent nationally.

“The results are certainly sobering but they are not surprising,” Walsh said. “We are pleased to see some improvement … but we know that too many Americans can’t make ends meet month to month.”

Business, Pages 31 on 05/31/2013

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