More than half (55%) of Americans say they would lose everything if there were a recession.
That’s according to the latest personal finance poll from Clever Real Estate. And this sentiment is not reserved only for lower-income Americans. This pervasive issue affects individuals across all demographics, transcending age, income level, and geographic location.
In today’s fast-paced world, financial concerns are a predominant source of anxiety for millions.
From mounting debt and unexpected expenses to the complexities of managing day-to-day finances, the pressure to maintain financial stability is overwhelming. Sadly, little is done to help those struggling and educate them as well.
Increased Costs Present Significant Barriers
Though inflation peaked in 2022, prices haven’t come down far enough for people to feel financially secure. A staggering 80% of Americans say that the cost of living is their most significant stressor, with inflation a close second at 73%.
The problem is that as costs rise, incomes do not — or at least not at a level that keeps consumers’ heads above water.
Wages are a problem, with salaries remaining the same despite soaring basic needs costs. Incomes are simply not meeting the public’s needs. Making ends meet is getting harder; 56% of Americans report being underpaid.
For many, especially young Americans, home ownership looks bleak. Mortgage interest rates are at a 30-year high, and only those with a substantial amount of money saved will likely own a home.
Curbing Spending Often Unrealistic
For those facing financial difficulties, the pat solution to cut back on monthly expenses no longer works. In 2023, rising prices forced 93% of Americans into serious spending cutbacks, and 70% say that affording basic expenses is a struggle. Almost half (47%) of millennials struggle to afford housing, and 56% have difficulty paying their bills.
Cutting back on spending is easier said than done. When consumers have no purchases besides essentials, cutting back means denying necessities like food, medical care, and housing. 44% of Americans admit to skipping meals to be able to pay a bill. These legitimate needs are often the first areas cut when consumers can’t afford the basics.
Rising Debt With Little Hope of Climbing Out
More than half of respondents (52%) said that if they lost their income, they would run out of money within 30 days. Nearly one-third (29%) said it would only take a week or less. One-quarter of respondents listed their net worth as either zero or negative.
In 2023, almost 40% of Americans plunged deeper into debt. An alarming 35% believe they will never overcome their debt. Credit card debt continues to be a growing problem among Americans, with 61% reporting that they owe an average of $5,875 on their credit cards.
Millennials owe the most, with an average balance of $6,794, followed by baby boomers with $5,143 outstanding. Of those who report credit card debt, 23% say they go deeper into debt each month.
Lack of Retirement Savings
Around 37% of respondents say they have not saved anything for retirement. Those with money saved don’t have nearly enough, and 48% believe they will outlive their savings. However, the problem is more complex than offering a retirement calculator to help people better estimate how much they need to save. Because of high prices and low wages, most cannot afford to put money aside for their golden years.
Financial Illiteracy Poses Problems
Almost half of Americans (46%) believe that money management is more important than problem-solving, critical thinking, and communication. However, 46% admit to being insecure because they lack adequate financial knowledge.
Financial education, awareness, and financial responsibility are lacking, as 28% don’t know their credit cards’ interest rates, and 21% don’t know what a 401(k) is.
Ways To Improve Your Financial Situation
The economic landscape is not consumer-friendly, and many believe it never will be. That doesn’t mean people never escape debt or afford things beyond the basic expenses, but they need to get smarter about it.
If cutting back isn’t helping, they may go the route some are taking and opt to get a second job, but work-life balance is vital for mental health. Demanding work schedules negatively affect life quality and overall wellness.
Finding good side hustle ideas is an option that works for many Americans. These gigs are typically outside the standard 9-to-5 and often have flexible schedules. This flexibility means a person can choose when to work and relax.
The key is to learn to work smarter, not harder. Educate yourself to improve your financial literacy and plan to get on track. It might take some work, but it is possible.
