A Glimmer of Hope for Americans’ Finances

At the end of 2022 going into the new year, two-thirds of American adults said they were confident in their ability to reach their financial goals, and a third felt hopeful about their finances, New York Life reported this week.

These were similar to levels of confidence respondents indicated in among those surveyed a year ago, New York Life said in a statement.

At the same time, participants in the new survey said inflation was their main concern, followed by a potential recession and rising interest rates.

The survey also found that women and Gen Xers are feeling the crunch more than other groups, reporting a lower average amount of savings and feeling less financially confident.

“While financial health and confidence for Americans may differ for myriad factors, it’s worth noting that women and Gen Xers, or those within the ‘Sandwich Generation,’ are likely parent-caregivers, handling both parent or guardian and unpaid adult caregiving roles, often leading to greater levels of stress,” Suzanne Schmitt, head of financial wellness at New York Life, said in the statement.

She pointed to AARP data from 2020 showing that 61% of American caregivers are women, and that “their financial needs and priorities, including saving, investing and protection, require a relevant strategy to adequately support those distinct needs.”

Schmitt said this may include working with a financial professional to understand those priorities, address barriers to equitable financial wellbeing and help improve their confidence at a time of market uncertainty.

New York Life conducted the online poll between Dec. 17 and Dec. 20 among a national sample of 4,410 adults.

Optimism Differs Greatly by Gender

Thinking about the state of their finances at the turn of the year, 37% of male respondents said they wee hopeful, compared with only 28% of their female counterparts. Among those working toward a financial goal, 26% of men but just 17% of women felt on track.

Further demonstrating the gender divide, 39% of women reported feeling stressed and 36% said they felt anxious, compared with 26% of men in both cases.

Survey participants aimed to save an average of $5,437 in 2022, but came up short, averaging $5,011 in savings. Again, the results showed a big discrepancy between women and men: Women saved an average of $3,146, while men socked away an average of $7,007. Millennials had the highest saving rate of any generational cohort, averaging $6,043 last year.

Those habits will lay a good foundation for 2023; 83% of respondents report having a long-term financial goal for 2023, with building emergency funds and paying off credit card debt being the most common.

Top Concerns in 2023

Sixty-eight percent of the survey sample expressed concern that inflation could affect their finances in 2023, and 36% worried about a potential recession.

About a fifth of millennials and Generation Z said they are worried about the effect of potential layoffs and housing market prices on their finances in 2023, more than other generations.

Half of all respondents expect their living expenses to be higher in the first half of 2023 than they were at year-end. Unfortunately, 7 in 10 reported that they are currently in debt, mainly because of what they owe on their credit cards, and also because of mortgage or home equity loan debt.

The average total credit card debt owed by respondents is $6,321, with Gen Xers and baby boomers owing slightly more ($7,004 and $6,784, respectively) than younger folks. Those with credit card debt reported contributing an average of $430 each month toward paying it off.

Needed: Financial Guidance, Debt Management Strategies

Seventy-one percent of survey participants reported that they either do not have a financial strategy in place, or do but need help with it in some way.

Among those who need help, 46% said it is with building emergency funds, 38% being on track to retire at their desired age and 37% paying off credit card debt.

Sixty-two percent of those who are currently in debt reported that they have changed their strategy for managing their debts in the past year, most commonly by paying more than the monthly minimum.

Among Gen Zers and millennials, 72% reported that their debt management strategy has changed in the past year — more than older respondents.

Thirty-one percent of respondents who have money invested in the stock market or mutual funds said they plan to make changes to their investment portfolio or strategy in 2023, with Gen Zers and millennials most likely to do so.

Among those who are planning on making changes to their investment portfolio or strategy, 45% said they are doing so by working with a financial professional or robo-advisor, 40% are rebalancing their portfolio and 39% are diversifying their portfolio.

More than a quarter of those who have money invested said they plan to invest more money in the new year, an average of $14,292. Their main reasons for doing so are to ensure their financial security and to build their own or their family’s wealth.

Among those who plan to invest less money in 2023, the average reduction is $2,221.