Poll: 2 out of 3 don’t see improvement in their personal finances in 2022 Images | Personal finance
Two-thirds of U.S. consumers don’t expect their personal finances to improve in 2022, with just over half of that group citing inflation as a barrier to better financial health, according to the Financial Security Index of Bankrate December. Inflation jumped 6.8% in November 2021, putting it at an all-time high of 39 years as food, housing and energy prices soared.
“Inflation concerns have lowered consumer confidence to its lowest level in a decade and is the number one reason Americans don’t expect their finances to improve, especially to improve. deteriorate, “said Greg McBride, chief financial analyst at Bankrate. “This sentiment goes far beyond gas prices, as inflation has widened and consumers are seeing higher prices at every turn.”
Other top reasons cited by those who don’t expect financial improvement in 2022 include the ongoing COVID-19 pandemic, stagnant or falling wages, personal debt, and shifting interest rates. Of the one-third of respondents to the personal finance survey who expect their financial situation to improve in the coming year, 46% attribute their optimism to making more money at work and 36% to having less debt.
âCOVID-19 is still considered a financial hurdle in 2022.
– Others blame political partisanship for the financial problems.
– Financial optimism varies by age and location.
âU.S. Consumers are determined to reduce their debt.
COVID-19 Still Seen As A Financial Barrier In 2022
The ongoing COVID-19 pandemic is one of the main reasons people expect their personal finances not to improve in 2022, according to the survey, which was conducted after the emergence of the omicron variant. As the country is on the verge of entering the third year of the pandemic, rising prices and supply chain issues are areas of concern, and some people continue to postpone financial milestones as a result.
The omicron variant may spread more easily than other variants, and the effectiveness of vaccines against these newer variants remains to be determined, the CDC reports. It also remains to be seen to what extent the omicron will affect the economy, experts say.
Others blame political partisanship for financial problems
Political partisanship is one reason many U.S. consumers expect their finances not to improve in 2022, according to the survey. Those who expected their financial situation to worsen or stay the same are blaming political leaders in Washington at a rate of 57% and 25%, respectively.
In recent days, the Senate voted in favor of a bill that would allow the debt ceiling to be lifted, a move that could prevent the country from defaulting on its debt. If the two political parties fail to agree on the terms of a bill that would increase the amount of money the government is allowed to borrow, the US economy could be at risk, analysts said.
Financial optimism varies by age and location
Optimism about improving finances in 2022 is highest among Gen Zs, those born from 1997 to 2012, and decreases with each successive generation, according to the Bankrate survey results.
Gen Z and millennials who said they were optimistic about 2022’s finances most often attributed it to making more money at work, while baby boomers who felt positive reported having less debt.
Among those who thought their financial situation would worsen in 2022, inflation was cited prominently as the reason by Gen Xers (73%) and Baby Boomers (79%), compared with a smaller percentage of the generation Y (53%).
Levels of financial optimism also varied by geographic region, with Westerners having the most positive outlook (40%) and Midwesters having the least positive (28%).
American consumers are determined to reduce their debt
When it comes to financial goals, 20% of survey respondents most often mentioned paying off their debts as a priority. Strengthening emergency savings was cited by 14 percent, while staying on a budget was cited by 13 percent. Other goals cited by respondents include saving for retirement, investing more, getting a better-paying job, and buying a home. Almost a fifth of respondents, however, said they did not have financial goals.
âPaying off debt before interest rates start to rise is a prudent move and the most cited financial target for 2022,â McBride said. âSaving more for emergencies, budgeting better for expenses and saving more for retirement are all marks that are also emerging on the road to financial security. “
How to repay your debt in 2022
A fifth of those surveyed identified paying down debt in the coming year as a financial priority. Here are some steps you can take to get started:
-Respect a budget. Create a monthly budget if you don’t already have one. Include a line for debt repayment. Once you’ve listed your other monthly expenses like housing, utilities, car payments, and food, you’ll have an idea of ââhow much you can spend on debt repayment.
– Put money in an emergency fund. The biggest regret of most Americans is not saving enough for emergencies. Having money in the bank for often unforeseen expenses like medical bills, household appliance purchases, or car repairs can keep you from going into more debt.
âCancel unused subscriptions. Examine credit card statements for items you no longer use, such as streaming services, newspaper subscriptions, and gym memberships. These fees add up and you might be amazed at how much you can save each month by eliminating them.
– Spend less on food. Rather than dramatically reducing restaurant expenses, try eating more often at home. Plus, preparing meals in advance can help you avoid spending excessive sums on take out for lunch or dinner.