A new report reveals that Americans are feeling simultaneously optimistic and overwhelmed by their finances as they become more mindful of their spending and take steps to improve their financial lives.
Findings from the spring 2019 Merrill Edge® Report reveal that many Americans are taking positive steps that are leading to a higher level of confidence about their financial future, but the report also shows that finances are taking a toll on mental and physical health – even more so among women.
The report is a biannual study of more than 1,000 mass affluent Americans’ evolving financial concerns and priorities (for purposes of the study, mass affluent is generally defined as those with investable assets between $50,000 and $250,000). Thanks to better spending and savings habits, 85% of respondents improved their financial lives in meaningful ways in the last year:
- 45% worked at improving their credit score;
- 43% worked toward paying off some or all their credit card debt; and
- 35% established an emergency fund by setting enough aside to live on for three months without an income.
In addition, far fewer people are paying only the minimum balance on their credit card (17%), spending more than half of their paycheck on a single purchase (14%) or dipping into their retirement savings (11%).
Possibly because of these positive steps, nearly half of Gen Zers and Millennials – 44% and 48% – believe they’ll be millionaires one day. What’s more, most respondents across generations are confident in their ability to:
- retire when they want (80%);
- leave money behind for their children (80%);
- pay off student loan debt (77%); and
- even buy a second or vacation home (57%).
Mind, Body & Toll
While respondents report becoming more conscientious about money and mindful of their spending, many say that their financial life weighs heavily on their minds, affecting both their mental (59%) and physical (56%) health – and the effect is even more pronounced among today’s younger generations and women of all ages.
In addition, the study found that more than half of respondents (51%) are worried about their finances over the next five years, with top concerns including the potential for an inadequate amount of savings (55%), political instability (53%), a looming recession (47%) and market volatility (45%).
“On the bright side, Americans are prioritizing their financial goals, and taking steps towards improving their futures,” notes Aron Levine, head of Consumer Banking and Investments for Bank of America. Levine adds, however, that many find managing their money causes them a great deal of stress.
In fact, if given the choice of never having to manage their personal finances again as opposed to taking some other action, survey respondents would rather:
- Give up all social media platforms forever (41%)
- Cut carbs, sugar and/or alcohol from their life (37%)
- Lose access to their smartphone for a month (35%)
- Run into their ex every time they’re out with their current partner (25%)
- Move back in with their parents (25%)
The need to tackle debt and overcome finance-related stress may be why 55% of respondents are currently turning to professional financial guidance, either in person or online, and why two-thirds plan to do so in the future, the study notes.
A growing number are also embracing new technology and financial apps to help save and manage their money, including consumer banking apps (71%), money transfer apps (65%), personal finance apps (63%) and automated investment apps (57%).
Independent market research company Concentrix conducted the nationally representative online survey on behalf of Merrill Edge from April 17-May 9, 2019, consisting of 1,000 mass affluent respondents throughout the United States. Respondents were defined as aged 18 to 23 (Gen Z) with investable assets between $50,000 and $250,000 or those aged 18 to 23 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 24-plus with investable assets between $50,000 and $250,000.