Americans Feeling the Heat Over Their Money Matters

Editor’s Note: This is the first part of a four-part series on financial literacy in the United States. You can find Part 1 of the series here. Stay tuned for more helpful articles on how you can reach the retirement you have worked hard to attain.

If financial matters concern you, you aren’t alone.

A recent survey conducted by Harris Poll on behalf of Purchasing Power, reveals that 87% of survey participants who are employed full-time (or have a spouse employed full-time) are at least somewhat stressed about their current finances. And 25% of the people feeling the heat over money matters measure their stress level as either “quite a bit” or “a great deal” of stress.

So what’s worrying everyone? Plenty. Household bills are the major cause of financial stress among the 900 participants in the Purchasing Power survey.

The primary stress triggers, ranked in order, are:

• Household bills (mortgage/rent, utilities and transportation) – 47%
• Lack of funds to cover unexpected expenses (car and home repairs) – 43%
• Retirement planning (little/ no retirement savings, no post-employment plan) – 37%
• Healthcare expenses – 34%
• High credit balance – 30%
• Accumulating credit card debt – 29%
• Lifestyle changes (loss of/decrease in household income, elderly care) – 25%
• Education (tuition, daycare fees, student loan payments) – 21%

In turn, these money stressors and others may have a profound impact on people’s quality of life.

How Did We Get Here?

As Liza Minnelli and Joel Grey famously sang in the movie “Cabaret,” money makes the world go around. But, in many cases, managing money, investing money, saving money, and growing money can be said to be largely self-taught, DIY skills.

“Although the U.S. economy is healthy and the stock market continues to rise, employees are still stressed about their finances. Many struggle to pay their household bills because financially-fragile employees don’t necessarily benefit from these trends,” said Scott Rosenberg, Purchasing Power president.

“The reason employees have financial issues usually points to a lack of financial literacy. In some cases, employees with financial issues don’t have healthy financial habits, so they don’t know how to resolve their situation.”

The Purchasing Power® Financial Stress Survey also revealed that 74% of full-time employees experienced an unexpected expense in the past 12 months. The most common of these surprise expenses were:

• Vehicle repair/replacement (57%);
• Medical care costs (43%);
• Home repairs (40%); and
• Home appliance replacements (29%).

And how did most people in the study pay for these expenses? Good-old credit cards came in as the number-one payment method.

That was followed by dipping into emergency savings and using money intended for other household bills. Luckily, the last resort was borrowing from retirement savings, which is a good sign that people use that as the option of last resort.

Financial Literacy Lacking

Even if they know it’s best not to touch their retirement accounts early, Americans otherwise show a distinct lack of financial literacy.

The aftermath of the Great Recession was supposed to imprint greater money awareness on us all. But in a 2015 study, nearly two-thirds of Americans couldn’t pass a basic financial literacy test, meaning they got fewer than four answers correct on a five-question quiz.

Just 37% of the 27,564 people who participated in The National Capability Study by the FINRA Foundation were able to pass the test, which is even fewer than the 42% who passed the same test in 2009.

Jim Chilton, CEO and Founder of the Society for Financial Awareness, defines financial illiteracy not as being ignorant or dumb, but rather as not having been in a position to learn about effective financial management. This lack of financial education leads to people making bad money decisions – which open wide the floodgates for stress, anxiety and more financial headaches.

Keeping Us Awake at Night

Do you have an occasional sleepless night worrying about a financial issue? According to CreditCards.com, 65% of Americans report having insomnia over money issues. That is a 9-point jump from 56% in 2007. Here’s a quick look at the top sleep thieves for Americans in 2017:

• 38% worry about healthcare or insurance bills
• 37% fret over saving enough for retirement
• 34% lose sleep over educational expenses
• 26% stay awake worrying about their mortgage or rent
• 22% are concerned about credit card debt

It’s interesting that credit card debt concerns approximately just one in four Americans when you realize our total credit card debt continued to climb in 2017.

Cumulative credit card debt reached an estimated $931 billion, a nearly 7% increase from the previous year, according to a NerdWallet analysis. Their figure is lower than the $1 trillion in debt often reported because they don’t include “overdraft lines of credit that don’t necessarily belong to credit card users.” 

However it’s calculated, we can all agree that credit card debt comes with a cost. The average household with revolving credit card debt pays $904 in interest annually.

Knowledge is Power…So Power Up!

Perhaps Jim Chilton of SOFA says it best: “Financial literacy is a big deal. It is incumbent upon all of us to be in the know, become students of our financial bounty, and learn to manage our cash rather than having it manage us.”

If you feel like stress is overtaking your fiscal and mental well-being, jump off the money-madness-merry-go-round long enough to pause and begin planning a better future. You are the only one who can take that first step down the path of financial security.

Some suggestions, offered by MagnifyMoney, include:

• Coming up with a debt reduction plan,
• Looking for ways to downsize (including your home),
• Limiting support of adult children, and
• Working longer.

While debt loads are burdensome, they are just one part of financial life. Overall, it’s prudent to work with a financial professional who can consider your situation, evaluate your needs and goals, and help you develop a plan to achieve your objectives.

Building a Future with Financial Guidance

If you’re looking for strategies to get your financial house in order—or to achieve other income and financial goals—financial professionals at SafeMoney.com are ready to guide you. They can help you discover powerful solutions using an assortment of retirement, financial, and guaranteed insurance strategies.

Use our “Find a Financial Professional” section to connect with someone directly. You can get started with a no-obligation conversation about your money worries, goals, and situation. And if you need personal guidance, call us at 877.476.9723.