NO POST-PANDEMIC RECOVERY: HOUSEHOLDS ARE NOW FACING AN ANXIETY-INDUCING COST-OF-LIVING CRISIS
Just as the easing of the pandemic made social interaction possible again, households are being hit with a “self-inflicted lockdown.” Developing a financial strategy is a critical step to taking back control and feeling more secure about the future.
A sharp rise in inflation means households are having to spend more on basic supplies like food and utilities. This inflationary pressure, coupled with an increase in interest rates, is causing higher mortgages and debt repayments, requiring household income to stretch further. To weather this storm, households must be disciplined in setting and following a financial plan.
When it comes to managing your finances, a sense of control is key to feeling secure. But less than half (45%) of households feel in control when managing their short- and long-term financial goals.
The first step to taking control of your finances is to put a financial plan in place. This encourages you to take stock of your priorities for the short- and long-term and be realistic about what you can achieve.
Just under two-thirds (64%) of the general population in the United States and Canada have some form of financial plan, and only a quarter (24%) have it written in some form. Having a written plan is by far the best approach as it allows you time to reflect on priorities and instills greater discipline to stick to and achieve your financial goals.
Equally, an uncertain economic outlook may bring with it an increased risk of job loss, loss of earnings or, for business owners, the risk of business failure.
However, only 36% of the general population in the United States and Canada feel financially prepared if an unexpected life event, such as job loss, was to occur. It is more important than ever for families to reflect on the financial protections they have in place and ensure they are adequate to manage and mitigate those risks.
In the face of these unsettling realities, it is unsurprising that people feel anxious and concerned. More than a third (36%) of households in the United States and Canada feel anxious or concerned about their current financial situation. This level of anxiety is considerably higher among women, as well as those aged 25-34.
Though it can be difficult when faced with short-term pressures and demands, developing a financial plan that anticipates the unexpected is key. Helping people develop a financial strategy and feel more secure about the future is at the heart of what WFGIA agents do every day. Agents can review your current financial situation and work with you to build a sound financial strategy, while also sharing key concepts that improve your financial knowledge. Individuals, families, and businesses have many options to help them take control of their futures.
These findings are taken from an independent research study conducted by H/Advisors Cicero on behalf of WFG to better understand how households think about money, their goals and aspirations and their financial confidence, control, and understanding. This is part of their commitment to improving financial wellbeing and financial literacy for households across the United States and Canada.