By Stephen Fournier – KeyBank Central New York Market President
The financial standing of Americans right now is shaken, but we’re seeing a determination to grow in different ways moving forward. Unemployment is hitting historically low numbers that haven’t been seen in a half-century, interest rates are putting pressures on different markets, and the looming gloom of a potential recession is not out of mind for those keeping a close eye on the economy, though not a certainty.
Beneath all of the macro-views of where we stand, we’re seeing growing financial stress from consumers. According to the 2023 KeyBank Financial Mobility Survey, consumers are shorter on cash, burned out, and ready to shift the pendulum of work-life balance; yet, they are eager to get a grip on their finances and understand how to improve their financial picture.
The Challenges
Now in its fourth year, the Financial Mobility Survey shows a tumultuous time for many with shifting priorities based on changing mindsets and needs. After an influx of savings and stimulus in the hands of consumers during the pandemic, we’re now seeing more respondents facing financial challenges. A key finding highlights that fewer people feel certain today (40%) that they could come up with $2,000 in an emergency as compared to last year (51%). In addition, two in five people (42%) report the feelings of being overwhelmed on a regular basis, with Millennials and those under 35 experiencing burnout more acutely (52%).
With those facing financial and other challenges increasing, financial confidence has taken a hit and, Americans are feeling less financially savvy. In fact, those who feel financially savvy dropped from 43% to 33% in one year. The good news? Financial savviness can be regained and the survey shows the top three drivers to increase financial savviness are awareness, access, and tools, which are all within reach if you know where to find them.
Changing Priorities
Americans are also reprioritizing what is a “must have” versus “nice to have” to face their financial challenges. At the same time, the definition of “needs” versus “wants” may be shifting. Americans are placing more money on experiences and events and are more likely to categorize them as “needs” when they previously considered them to be “wants.” Overall, nearly four in five people (77%) have made a change to their spending habits, primarily on discretionary items. One notable change is that vacations have now moved into the top spot as a planned large purchase. This may be a result of the high proportion of burn out Americans are experiencing and a way in which they recharge.
With all the stresses and changes in play, the pendulum of work-life balance and career is shifting closer to where it once was, with the survey showing a 50% rise in respondents prioritizing a high-paying salary compared to last year’s result. Still, while respondents say they are prioritizing higher earnings, they want a job that is secure and provides flexible hours.
Bringing it all together
What do all of these findings mean from a banking perspective in how we can – and should – support consumers in today’s environment? The survey says: helping clients fully understand their financial path and connecting them with the resources and tools available to help will win the day. A staggering 85% of respondents say they strongly desire to become more aware of their financial picture. This tells us a few things:
- Not enough people feel like they have a complete perspective of their finances or control over how they take the next steps on their financial path. This is likely a major contributor toward the burn out people are showing.
- Financial advisors and bankers can help by sharing tools, resources and overarching steps that can be taken to help clients understand their financial picture – and how clients could improve it.
At KeyBank, growing financial awareness is a part of our mission to help our clients thrive and we do this through a mix of banker advice, digital tools and educational resources. A first step we recommend is to make an appointment with a nearby banker for a Financial Wellness Review, a conversation that helps to determine financial goals and remove obstacles to get there. You can also take time to review our Financial Wellness Center and Banking 101 curriculum for tips and recommendations for how you could improve your financial picture.
While we can’t predict with certainty what the economic future holds, we know the 2023 Financial Mobility Survey results show Americans are in a place of wanting to control what they can control. Connecting consumers with digital tools, access to information, and advice that clients can trust will help them to find the next steps on their path and actions they can take to improve their financial confidence.
About the author: Stephen Fournier is President of KeyBank’s Central New York Market. He may be reached at either 315-470-5096 or [email protected]. This is designed to provide general information only. All credit products are subject to collateral and/or credit approval, terms, conditions, availability and subject to change.
How to Consolidate Debt
There are several options to consider for consolidating debt – explore them and see if one is right for you.
Personal loan: An unsecured loan with a fixed monthly rate means a locked-in plan for a set monthly payment and a payoff date. KeyBank offers solutions that won’t require collateral and don’t include fees for originating the loan or paying it off early.
Home equity: Home equity is the difference between your home’s current market value and the balance you owe on your mortgage. By borrowing against the equity in your home, lenders typically offer interest rates lower than those on credit card debt. A home equity line of credit could give you access to credit based on this equity.
Mortgage refinance: This method involves leveraging the equity in your home for a cash-out refinance, allowing you to use the difference to pay off high-interest debt. A refinance may impact your monthly mortgage payments, depending on your new interest rate, repayment term, and loan amount.
Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
