MSU Study: Families Need To Budget Better
EAST LANSING (WWJ) - A recent study out of Michigan State University reveals that Michigan residents aren't doing a good job budgeting their money, in spite of the state's ailing economy.
Lisa Cook, an MSU economist and professor at James Madison College, said she was astonished to discover that 81 percent of respondents with budgets said they never or only occasionally changed them, meaning residents rarely, if ever, curbed spending despite years of high unemployment, foreclosures and plummeting housing values and benefits.
In fact, instead of cutting back on expenses, most residents spent money from their retirement savings, the study found.
Speaking with WWJ Newsradio 950, Cook said it's important for parents to talk openly with their kids about money matters.
"Our households don't talk enough about their finances," Cook said.
"There are a lot of families that are on the streets these days, that are homeless these days, and the children don't know why they're homeless, or why they're moving, often due to foreclosure," she said.
"This conversation has to start a lot earlier,"Cook said, adding that she believes schools should offer classes that teach children how to budget their money.
What else can Michigan families do better? Cook said budgets should be monitored and adjusted regularly, regardless of the state of the economy.
She said savings goals and strategies should reflect anticipated life events – such as a college education, car or home purchase, birth of a child and retirement, as well as changes in a family member's employment situation.
Cook recommends meeting with a financial manager, and saving more aggressively.
