Consumers adapting to new financial environment

06.01.09
By Nicholas Storie

Many consumers now realize the significant impact late payments on credit cards and other bills can have on their credit score, prompting a number of Americans to rethink their spending, saving and bill-paying habits.

Results from the Western Union Payment Services Money Mindset Index, a national survey of 3,000 consumers, reveal that almost 60 percent of consumers feel they are currently worse off financially than they were six months ago.

One-fifth of respondents say they are "conflicted" about their money management habits, but Western Union found that people are taking steps to work on debt management.

"While people are still optimistic about the future, they continue to feel the effects of the economy," said David Shapiro, senior vice president, Western Union Global Payment Services.

"The challenging economic times are weighing on consumers so there is a need and desire for financial education, as well as a new approach to managing their finances."

The company found that better planning and budgeting are keys to improving former habits that may have led to missed payment deadlines and late fees.

Approximately one-third of survey respondents are now prioritizing their bill payment schedule with many more seeking new payment options.

Western Union says that 25 percent of consumers are looking for new ways to track their spending patterns, perhaps indicating that many are interested in improving their own financial savvy and money management skill set.

Many experts agree that financial literacy is one way to empower consumers. Understanding how a credit score is calculated and why it is important, for example, is one way for people to understand why they might be having trouble getting a home loan or opening a new credit card.

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As a result of the recession, people are putting more consideration into their budgets