You took home more money last year

Did you know that your paychecks in 2011 were a bit heftier than in years past? If you didn’t, then you’re not alone. According to a January poll conducted by the National Foundation for Credit Counseling (NFCC), 66 percent of respondents did not realize that, thanks to a 2 percent Social Security tax cut, their paychecks were larger this past year.

The problem is, if consumers find it that easy to overlook more money in their paycheck, they are likely overlooking the impact their spending habits – even buying one cup of coffee a day – can have on their overall financial situation.

If you’re wondering how much money a two-percent tax cut really amounts to, consider this: The 2 percent Social Security payroll tax cut puts $1,000 back into the pockets of a family earning $50,000 annually – a significant amount of money that could mean the difference between financial stability and financial distress each month.

Those aware of the increase appeared to have allocated the money responsibly, with the largest number of respondents indicating they used it to pay off debt, while the second-largest number caught up on past-due bills. Smaller percentages of respondents either increased their retirement contributions or saved the money. Only 1 percent indicated that they spent the money on something for themselves.

It’s important to remember that the key to financial wellness is having a solid budget – you have to be aware of every penny you spend and every penny you earn.

The January poll questions and answers are as follows:

With the 2011 two percentage point payroll tax cut, last year I …

  • … saved most of it (3 percent)
  • … caught up on past-due bills (8 percent)
  • … increased my retirement contributions (4 percent)
  • … treated myself to something special (1 percent)
  • … used it to pay off debt (18 percent)
  • … didn't realize my paycheck was larger (66 percent)

The NFCC’s January Financial Literacy Opinion Index was conducted from Jan. 1 to Jan. 31, 2012 via the NFCC website (, and was answered by 1,797 individuals.

Money Management International is a member of the NFCC. The NFCC is the nation’s largest and longest serving national nonprofit credit counseling organization. NFCC Members annually help over three million consumers through close to 800 community-based offices nationwide.

Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.