NDSU Extension Service, Published December 28 2010
Survey: North Dakotans lack financial capabilityFARGO - A new survey shows that many North Dakotans spend more than they make, and they don't have a "rainy day" fund in case of emergencies.
"This is a wake-up call for North Dakotans," says Debra Pankow, North Dakota State University Extension Service family economics specialist. "They are experiencing the same financial issues as everyone else in the U.S., even though the state is financially sound. Now is the time for people to take control of their finances."
The survey, commissioned by the FINRA Investor Education Foundation, is the first state-by-state assessment of Americans' financial capability. About 500 people in each state completed the survey.
In North Dakota, 20 percent reported that their spending exceeded their income in the past year, and 62 percent don't have a fund to cover expenses for three months in case of emergencies, such as an illness or the loss of their job.
"Spending more than you make, or even spending about the same amount as you make, means you aren't saving money," Pankow says.
Of the North Dakotans surveyed, 27 percent also reported using one or more nonbank borrowing sources, such as a payday loan, tax refund advance or pawn shop, in the past five years.
"Unfortunately, payday and 'quick refund' loans come with high fees," Pankow says.
The North Dakotans surveyed also were asked five questions relating to concepts of economics and finance in everyday life. On average, the respondents answered three of the questions correctly. In addition, 59 percent said they do not comparison shop for credit cards.
Based on the survey results, North Dakotans appear to be more financially capable than others in the U.S. in some areas but less capable in other areas. For example, 55 percent of Americans nationwide report spending more than or equal to their income, and 60 percent of Americans do not have an emergency fund.
Also, 24 percent of Americans have engaged in some form of higher-cost, nonbank borrowing in the last five years, and 63 percent don't search for the best deals in credit cards, while, on average, they were able to answer three of the questions on fundamental financial concepts correctly.
For information on managing your money wisely, visit the NDSU Extension Service's family economics website at http://www.ag.ndsu.edu/money. To learn more about the financial capability survey, visit http://www.usfinancialcapability.org/.