Four years ago, Mark Little was in debt, had virtually nothing saved for his retirement and considered his credit card as his emergency fund.

Taking a friend’s advice, the then 41-year-old massage therapist enrolled in an four-week financial seminar to learn how to manage his finances and get out of debt.

“I had definitely heard of a budget and had resisted that for most of my life,” he said. “I had a carefree attitude about money.”

He’s not alone.

As the nation continues to come out of the Great Recession that saw financially stable families lose their homes to foreclosures, Americans are taking a closer look at how well-off they actually are, and the results can be surprising.

Four out of five Americans have at least one type of debt, such as a mortgages, student loans or unpaid medical bills, according to the 2012 National Financial Capability Study.

And only 40 percent of the population has three months’ worth of emergency funds, the study said.

The study gave respondents a quiz to measure their financial literacy – an understanding of financial terms and obligations – and just 14 percent of respondents answered all five questions correctly.

Most people have basic financial literacy and understand what taxes are taken out of their paychecks each month and how to create a budget, said Matt Kelly, a personal-finance coach who taught the seminar Little took and writes a monthly personal-finance column for The Durango Herald.

“What they lack is the more advanced, complicated financial literacy, and, unfortunately, the real problems come with the advanced financial literacy: understanding the real implications of credit cards and credit card interest,” he said.

One of those problems is saving enough for retirement.

Twenty-eight percent of respondents in a recent Employee Benefit Research Institute study said they have less than $1,000 saved for retirement and 57 percent said they had less than $25,000.

Many Americans are depending on Social Security for their retirement, said Steve Pease, a certified financial planner with Oxford Asset Management.

“It’s a supplement. It’s not a good retirement by itself. If you save 10 percent of your paycheck for your entire working career, you will have a very comfortable retirement,” he said. “I tell everybody to pay yourself first. Put money away for savings off the top, and then start working on your bills.”

Kelly said less than 20 percent of the population is keeping what he calls a realistic budget. Most people can monitor how much they make each month and not spend more than that amount. But few people take into account the expenses that aren’t paid on a monthly basis, such as new tires or Christmas shopping.

Those large purchases typically feel like an emergency, Kelly said, but people can plan their budget so the larger expenses won’t be as big of a hit to the purse strings.

For example, the average American spent $854 on Christmas shopping in 2012, according to the American Research Group. In Kelly’s realistic budget, $71 would be put into savings each month to pay for Christmas.

But Step One of creating a budget is figuring out where the money is going.

“I’ve found that a lot of people have no idea where their money goes each month,” said Alison Andersen, a local personal-finance coach. “They are typically spending a lot of money on things they can’t even keep track of, like discretionary funds, eating out or snacks, or coffees.”

Little fit into this category, saying the majority of his money went to food and eating out.

“It’s easy to dump $15 on a lunch or breakfast. Do that a few times a week, and you’re out of money,” he said. “Now my biggest expense beyond rent is still food, but it’s food I cook, and I eat healthier.”

Little paid off his debt two years after the seminar with Kelly and remains debt-free.

“Even though there are days when the coffers look a little low, at least I don’t owe anybody anything, and that’s a good feeling,” he said.

jdahl@durangoherald.com

Financial Resources

Here are some recommended resources for helping people with personal finances:

Matt Kelly

www.money.cnn.com

Your Money or Your Life by Vicki Robin and Joe Dominquez.

The Millionaire Next Door by Thomas Stanley and William Danko.

Steve Pease

Money magazine.

The American Association of Individual Investors.

Alison Andersen

www.mint.com.

www.moneymanagement.com.

The National Endowment for Financial Education.