In a recent CivicScience report on financial literacy, data showed 68% of U.S. adults feel at least somewhat secure about their financial situation. Yet the percentage of the population who feel ‘very secure’ only comes to 19%, which leaves another 81% of people in the U.S. feeling so-so or insecure about money. The causes are manifold: banks are looking unstable, triggering memories of financial hardship of barely 15 years ago, while inflation is staying top of mind as consumers plan their summers. People have gone so far as to say their finances are weighing on their mental health. Yikes.
As of the end of April, CivicScience data reveal that more than 8-in-10 U.S. adults say they are experiencing stress due to a financial reason. The greatest source of financial stress for these consumers comes from managing living expenses such as groceries, gas, and utilities (33%). Despite talk of inflation slowing down soon, many consumers are still operating with concern about affording the basics they need to live.
However, this figure represents a small decrease compared to last year, while slightly more people are now concerned about saving and investing for the future as well as managing their debt. Stress over job security has actually improved by two percentage points over the last year.
Managing living expenses is the primary source of financial stress for all age groups, with a slight variation occurring around the age of 35. People under 35 are experiencing more stress over managing debt than people over 35. Older generations are in turn more likely to be concerned about saving and planning for the future.
Gender data are similar, with both men and women primarily concerned about affording the cost of living, but men are actually slightly more concerned about saving for the future and slightly less concerned about cost of living.
What businesses need to know about current financial stressors is how they affect consumer spending. Consumers who conduct the majority of their shopping online (outside of groceries, the pharmacy, etc.) are the most likely to say managing debt is their biggest source of stress – much more than those who do more in-store shopping. People who shop in stores are the most likely to cite managing living expenses as their main source of financial stress, followed by saving for the future. Concerns over credit and job insecurity are also more closely correlated with online shoppers.
Some consumers are dealing with anxiety over money by finding ways they are more comfortable spending it. For example, there has been an increase this year in shopping for groceries online and using buy now, pay later (BNPL) programs. CivicScience data further illustrate the effects of financial anxiety by seeing how different stressors correlate with usage of buy now, pay later. More than 2-in-5 consumers who are specifically stressed about managing debt – which they accrue more of by using payment programs – have utilized BNPL in the last six months and an additional 10% intend to do so in the future. And, while a small portion of U.S. adults are predominantly concerned about improving their credit scores, those who are over-index in likelihood to pursue online payment programs in the future.
In general, 60% of U.S. adults say now is a bad time for a major purchase (such as a new home), and this figure is even higher among those whose main financial stressor is managing living expenses or debt. Despite a strong job market and talk of a slowdown to inflation, current U.S. consumer confidence in the economy or personal finances remains similar to last year, if not slightly worse off, as shown by the Penta-CivicScience Economic Sentiment Index.
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