(MONEY Magazine) – What subject is likeliest to set tempers boiling around the American home? Politics? Not even in the running. Children? Sex? In-laws? Close, but not on the front burner. The answer is money, the subject everybody seems to talk about -- and everybody wishes he could do more about. That money is the No. 1 fighting word in America, cited by 37% of family financial decision makers, is just one of the compelling findings that emerge from Americans and Their Money: 1986, the fourth annual nationwide poll conducted for Money by Lieberman Research Inc. of New York City. Among this year's other noteworthy discoveries: Overall, people have slightly more in savings and investments than in 1985, but they are also going far deeper into debt. They think that stocks and mutual funds will perform well on the one hand, yet by a wide margin believe that inflation, unemployment and interest rates will rise next year. By 20 to 1, they say they prefer to buy American rather than imported products; but by better than 2 to 1 they feel that foreign goods are, in the main, more economical. And, in a major change from previous years, Americans are no longer convinced that their homes are their best-performing investments. The study is drawn from a 12-page questionnaire completed between May 23 and July 2 by 2,555 randomly sampled adults who are their families' chief financial decision makers. This criterion yielded a ratio of two men polled to every woman. The poll has a sampling error of 2% to 3%. Herewith, the highlights of this provocative survey: How much money do you owe? Considerably more than last year. Major household debt (including mortgages) rose by a solid 20%. Though 62% of our respondents moaned about loans, roughly seven out of 10 have them. Debtors on average increased their burden from $33,300 in 1985 to $40,500 this year. Mortgage loans constitute 68% of that amount, while non-mortgage debt (principally auto loans and other consumer debt) accounts for 32%, up markedly from 26% the previous year. That rise suggests that Americans feel either more inclined or more compelled than in 1985 to go into the red for items they want or need. Among people with household incomes below $15,000, nonmortgage debt constituted an even higher 36% of total household indebtedness, compared with 22% for households with incomes greater than $50,000. The message: the rich borrow to buy houses, the less affluent to buy consumer items. The rise in relative importance of non-mortgage debt occurs in the face of anger over rates on credit cards. Fully 62% were bothered by stubbornly high interest rates on plastic. That didn't stop cardholders from charging an average of $2,500 on their cards in the 12 months preceding our survey, up from $1,900 a year ago. Does all this mean that Americans are more sanguine about the economy's prospects? Yes and no, says Seymour Leiberman, who produces our survey. ''Among those in higher income brackets,'' he says, ''I think these figures reflect optimism. For those less well off, they simply reflect need.'' Which of your savings and investments increased the most in value in the past 12 months? Our respondents indicate a holding pattern virtually across the board in savings and investments. Americans' average savings and investment balances rose slightly from 1985, to $39,900 from $38,500, but that 3.7% increase roughly paralleled the inflation rate. As to the investments that performed best, one out of five family financial managers report that savings accounts were their biggest gainers for the year -- a fact that reflects more accurately the ubiquity of these low-yielding vehicles, owned by 71% of the population, than their 5% to 6% returns. Among those with a variety of investments, however, mutual funds ranked tops, cited by 48% of fund share owners, followed by stocks, mentioned as the ne plus ultra by 44% of those who own corporate shares. Findings also suggest a tentative outlook for next year. A cautious 41% of securities owners think that stocks and mutual funds will increase in value over the year ahead. Meanwhile, more people think the inflation rate, currently 2%, will rise rather than fall in the next 12 months by a margin of 43% vs. 8%; 39% vs. 16% think unemployment will go up instead of down; and 70% vs. 8% are expecting oil and gas prices to be higher rather than lower a year from now. Is your real estate increasing in value? The real estate market may have leveled off. True, homeowners report that the value of their homes has doubled their original purchase price, increasing from an average of $41,200 at purchase to $82,400 now. But it's those who bought 15 or more years ago who are really prospering: the value of their homes, they say, has risen by 316%, while those who bought in the past five years have enjoyed an increase of only 31%. Further, in assessing their overall investments, only 13% of homeowners listed their primary residence as their most productive investment last year. Indeed, among those with a variety of investments, that 13% figure placed homes last in a list of 12 asset categories. Are you content with your financial situation? A clear majority, 55%, say yes. But that figure also means that 45% are not satisfied with their personal financial situations. Still, an even 50% say they expect to be better off next year. People with more money are more content: 77% satisfaction for those with incomes of $50,000 or more, while only 30% among those earning less than $15,000 (the group, besides the very rich, that stands to benefit most from the new tax package). And while there are valid concerns these days about the plight of the elderly, our respondents clearly indicate that financial contentment increases with age. Only 47% of those under 35 expressed satisfaction vs. 61% for those in the 50-to-64 age category and 69% for senior citizens. Older people, however, are more worried about their financial futures than are young people, probably because a greater percentage of the elderly are on inflation-vulnerable fixed incomes. Only 16% of respondents over 65 say they expect next year to be better financially for them than this year was. The comparable figure for people under 35: 72%. Does money buy happiness? You bet. Or at least people think so. When family financial decision makers were asked, ''Overall, how happy are you?'', a third of those from households with incomes greater than $50,000, compared with only 22% of those from families earning less than $15,000, call themselves very happy. Moreover, of the 50% of respondents who expect their financial lots to improve next year, 27% term themselves very happy, as against 21% for those who see their fiscal situation worsening. The inevitable conclusion, says Dr. Lieberman, is that, ''in the American mind, money and happiness go together.'' If so, then times cannot be too bad; a whopping 89% of our respondents are either very happy or fairly happy -- or at least they say they are. How do you think President Reagan's policies have affected your personal financial situation in the past 12 months? Happiness does not necessarily translate into a warm regard for the ways President Reagan's policies have affected Americans' personal finances in the past year. A third of those polled feel that the President's policies have worsened their own financial state of affairs, while a mere 23% give him credit for improving their situation. Here again there is a marked division at different income levels. By a 44% to 20% margin, those with household earnings greater than $50,000 think Reaganomics has helped them in the past year; by an even wider margin (46% to 13%), however, financial leaders in households with earnings under $15,000 believe the President's programs -- or lack thereof -- have hurt their wallets. Yet people aren't quite ready to turn the nation's pursestrings over to the Democrats. By a slim 31%-to-27% margin, respondents think they would be better off financially under a Republican presidency than under a Democratic one -- figures that hold up fairly well across all age brackets. Women, though, favored the Democrats on this question by a substantial 33%-to-23% edge. Somewhat surprisingly, fully 42% expressed no opinion on the subject. Lieberman was particularly struck by this finding. Says he: ''I think the large component expressing no opinion indicates a general cynicism about the ability of either party to help people.'' Do you argue at home about money? Absolutely. A full 37% of those polled admit they argued about money last year. Children (29%) and household chores (26%) placed second and third, while such ostensibly sensitive subjects as sex and in-laws ranked down at 14%. Those ancient controversies, politics and religion, now rate a mere 6%. The higher the income, the cooler the heads. A testy 53% of those in the less- than-$15,000 bracket argued about money within the past year as opposed to 43% in the $25,000-to-$34,000 group and only 31% in the $50,000-and-up sector. Indeed, only the well-heeled and the elderly argued more about nonmonetary topics in the past year than about financial ones. The most frequent fighting subjects for people aged 65 and over: diets and health, which provoked arguments among 16% of such respondents. For those with household incomes above $50,000, the troublesome topic was children, mentioned by 38%. Says Lieberman: ''People who already have the things they need turn their attention to their children.'' Will money improve your sex life? To a third (34%) of our respondents, riches mean richer sex. Men (37%) felt more strongly about dollar-sign aphrodesia than did women (30%). Roughly 40% of financial decision makers in households with earnings of less than $25,000 think, perhaps wistfully, that having more money would rev up their sex lives. The figure for households with incomes greater than $50,000 is 30%. The conclusion: people who have it made know that money, while perhaps buying happiness, does not mean a better sex life. Older individuals -- perhaps wiser, perhaps less sexually active -- feel the same way. Only 23% of people over 65 think that having more money might lead to better sex; fully 37% of respondents under 35 feel that way. As Lieberman observes, ''Younger and lower-income people think either that having money makes them more appealing or that having money permits a life style that makes sex more enjoyable.'' What would you do with a windfall of $10,000? Americans tend to be conservative about found money. If fantasy cash came their way, 56% of family financial decision makers say they would save at least some of it; 46% would use some to pay off debts; only 26% would invest it. (The percentages add up to more than 100% because most polled had more than one use for extra money.) A giddy 51% concede they would spend at least some of the cash. The objects of their desires: a house -- 16% of the spenders would use part of the windfall for a down payment; a vacation, also mentioned by 16%; and a car, cited by 15%. A surprising 31% contend they would give part of such a found sum to other people. Even more striking is the finding that poorer people are more charitable than wealthier ones are: 36% of the less-than-$15,000 income group claim they would use the money to help their parents or children; only 13% of the upperincome respondents were so generous. That doesn't necessarily mean that well-to-do Americans are a clan of Silas Marners, says Lieberman. His theory: ''Higher-income people associate with people as well-off as they are. It's the lower-income people with friends and relatives who may need financial help.'' How do you rate yourself as a money manager? Nearly six out of 10 Americans (58%) rate themselves as adept at managing money, while a solid 41% acknowledge that they are not. Women are more inclined than men to give themselves the nod: 63% of women, compared with 56% of men, call themselves good money managers. The essential distinction, however, is one of definition. Men view the question of sound money policies in long-range strategic terms; 54% and 52%, respectively, define good management as planning for retirement and selecting sound investments. In both instances, by a margin of 12 percentage points, fewer women thought in those terms. Women, by contrast, tend to be short-range tacticians: 61% of women (vs. 48% of men) say that being a good money manager means finding bargains and staying out of debt (69% vs. 56%). The definition also shifts dramatically along income lines. Two-thirds (67%) of upper-income people think careful tax planning is critical to good money management; less than a third (27%) of the lowest income group agree. On the other hand, more than 80% of those with household incomes less than $35,000 say that prompt payment of bills defines superior money management; only 65% of the $50,000-and-over class feel the same way. Clearly, those who find it easiest to qualify for credit no longer feel constrained to concentrate on this money-management area. Are you interested in hiring a professional financial planner? Increasingly, Americans are looking to independent professional planners -- as opposed to bankers, accountants and attorneys -- to help them with their savings, investment and insurance programs. More than one out of 10 Americans (13%) say they consulted a financial planner in the past year, up from 6% in 1985. Another one in 10 expects to hire a planner within the next two to three years. Furthermore, 30% say they would prefer the advice of a financial planning specialist to that of an accountant (16%), banker (12%), attorney (7%) or stockbroker (4%). Even so, bankers and accountants remain the professionals to whom Americans turn for financial advice most often; they were consulted within the past year by 27% and 18% of the respondents, respectively. The disparity between preference and actuality, says Lieberman, lies in a residual resistance to paying a separate fee to an adviser. ''People are still accustomed to getting what they think is free advice from their banker or accountant,'' he says. Even those who have already taken on a financial planner concede they are unwilling to pay as much as $1,000 for such advice. How concerned are you about the federal deficit? Very. Eight out of 10 Americans (78%), about the same number as last year, express concern about the $2 trillion federal deficit. To solve the problem, 69% want to see government spending reduced -- a figure that includes 41% who want to cut defense outlays and 31% who would pare welfare programs -- while a surprising 58% call for an increase in taxes. (The figures add up to more than 100% because many think more than one step must be taken to lower the deficit.) But only 11% care to see an overall tax increase (a finding further substantiated by the popularity of tax reform). Rather, they call for imposing import taxes on foreign cars (46%) and oil (31%). Only one of five say they understand the meaning of Gramm-Rudman, the deficit-cutting bill, well enough to explain it to a friend. How do you feel about buying American? Here Americans trotted out the flag: an overwhelming 80% to 4% prefer to buy U.S.-made products. As evidence that they are putting their money where their slogans are, 45% report that they are buying more U.S. products than they were a few years ago, while only 16% admit they are purchasing more foreign goods. Still, the operative word here is prefer. Nearly half (49%) still find foreign products more economical than U.S.-made goods, as against the 19% who associate economy with U.S. goods. That's a sizable disparity that is plainly reflected in the swelling balance-of-trade deficit. Says Lieberman: ''Americans are saying that they should be buying American. But there is a conflict between their roles as patriots and their roles as good purchasers.'' And until people begin to see genuinely better value in homemade goods, we ; will surely continue to see funny little cars tooling up and down U.S. highways, and Hong Kong suits on U.S. streets -- the promotional efforts of Bob Hope and Sammy Davis Jr. notwithstanding.

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