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New Thrivent survey finds Americans face steep challenges when it comes to building savings

Survey data shows inflation is having a direct impact on people’s ability to save and focus on their financial priorities, and may present a barrier to seeking financial advice

MINNEAPOLIS – In a new Consumer Financial Outlook Survey* by diversified financial services leader Thrivent, Americans revealed the extent to which inflation is putting pressure on their savings and financial priorities. Sixty-three percent said inflation is pushing them off track financially, and 60% said it’s getting in the way of saving. This likely explains why 78% of survey respondents said they wish they had more breathing room in their finances.

Inflation isn’t alone, however, in causing an undue burden on people’s finances. One-third of Americans reported their current employment situation (33%) is causing them to feel financially off track. Additionally, 29% of people said their personal financial habits, family circumstances and personal physical, mental and emotional well-being, each respectively, contributed to them feeling financially off track.

More than three-quarters of those surveyed (76%) said inflation/cost increases are negatively impacting their savings and putting them in a more vulnerable financial position. That percentage increased to 91% for those who feel financially off track.

According to the Consumer Price Index1, inflation has remained at elevated levels for the past several months. This has meant Americans are paying significantly more for common goods and services and can’t escape the financial pinch, regardless of income level.

“We’re seeing financial stress across the board,” said Mary Jane Fortin, executive vice president and chief commercial officer at Thrivent. “Due to inflation, many Americans don’t feel like they’re in a position to follow essential financial steps, like saving and budgeting. This is causing many people to feel financially off track. Right now, they need a financial strategy that gives them clarity on how to handle important decisions about their money.”

Savings are being impacted
Thrivent’s survey found Americans’ savings are taking a direct hit due to inflation. Fifty-nine percent of respondents said they feel like they are currently living paycheck to paycheck, leaving little to no room for building their savings. In fact, only 28% of survey respondents said they’re saving more than enough or a good amount right now.

Having enough in emergency savings, which is a cornerstone of good financial health, also is taking a hit. More than half of Americans (60%) said they would be concerned if faced with an unexpected $500 expense. This is especially concerning for those who feel financially off track: 82% said they would be concerned (and about two-thirds would be very concerned) about an unexpected expense and the impact it could have on them and their family’s financial well-being.

Greater focus on short-term financial goals
Inflation also is compromising people’s ability to focus on their short- and long-term financial goals in unison.

When asked about their top financial priorities over the next year, a higher percentage of Americans cited goals with more immediate financial urgency like increasing their earnings/income (36%), saving for an emergency (31%), paying off loans/debt (23%) and paying off credit cards (22%). Longer-term financial goals, like saving for retirement (20%), investing more (13%), creating a financial strategy (8%) and saving for a child’s college education (6%) appeared to be less pressing overall.

Priorities seem to be split depending on the level of financial preparedness among Americans. Those who feel financially off track cited the immediate goals as higher priority whereas those who feel financially on track were more likely to prioritize longer-term goals.

It's a challenging time to follow wise financial behaviors
While Americans recognize the behaviors that can improve their financial well-being, including increasing savings, current pressures may be preventing them from putting those into practice. For example:

  • 85% of those surveyed said living within their means is very or somewhat effective but only 68% currently do it.
  • 82% of those surveyed said actively following a household budget is very or somewhat effective but only 53% currently do it.
  • 77% of those surveyed said automating savings is very or somewhat effective but only 41% currently do it.
  • 76% said establishing a financial strategy to address short and long-term goals is very or somewhat effective but only 43% currently do it.

“It can be hard for people to think about implementing smart financial moves when they’re experiencing sticker shock that’s affecting their overall financial health,” said Fortin. “That’s why we believe so strongly in having a financial strategy in place. Intentional planning can help people hedge against the impacts of inflation and give them more confidence about their financial picture.”

Older generations are more likely to take steps to counter inflation
Some Americans are taking concrete actions to create more breathing room in their budget but the percentages aren’t terribly high. This is surprising given the level of stress people are feeling about their finances. For example, only 55% are dining out less, 47% are buying cheaper/discount groceries, 39% are driving less, 35% are reducing utility costs and 33% are shopping at lower-cost retailers. 

Interestingly, older generations are scaling back on their expenses relative to younger generations, with the biggest contrast emerging between Baby Boomers and Gen Z. According to the survey, when compared to Gen Z, Baby Boomers are:

  • 15% more likely to dine out less (58% versus 43%).
  • 13% more likely to buy cheaper/discount groceries (49% versus 36%).
  • 22% more likely to drive less (49% versus 27%).
  • 16% more likely to reduce utility costs (40% versus 24%).
  • 14% more likely to shop at lower-cost retailers (37% versus 23%).

They’re also not feeling the impact on their finances as strongly. When asked how increasing prices have impacted their savings goals and financial strategy, fewer Baby Boomers report feeling an “extensive or large” impact (38%) compared to all other generations, including Gen X (52%), Millennials (50%) and Gen Z (46%). This could signal Baby Boomers are at a point in their financial journey where they have an established strategy that's guiding them with their spending. Leaning into their plans could be giving them increased confidence and flexibility around key money decisions.

As people look to ease the effect of inflation on their finances, they’re going to need practical – and actionable – tips that have a lasting impact. Thrivent is offering the below advice to help get more people financially on track so they can experience greater financial clarity:

1)  Sort out emotions Money decisions can stir up strong emotions. In a challenging financial environment, it’s normal to feel anxious, stressed or even scared.

We recommend getting emotions out on the table first and asking: What is most concerning? When people identify their emotions and what they’re concerned about, it can reduce the ultimate impact. Second, people should ask themselves: What is in my control? For example, people can’t control market volatility, but they can take steps to rebalance their investment mix to match their risk tolerance.

2)  Get back to the basics – It’s a good practice for people to revisit their budget in response to significant changes to household income or expenses. With inflation driving up prices, now is a great time to get a grasp on expenses and their overall financial picture.

First, they should outline how much money is coming in each month. From there, they can map out where their money is going: How much is being directed to savings, bills, and everyday spending? 

This exercise can be done in many different ways – using pen and paper, a spreadsheet, or a mobile app or digital tool. The most important thing is to get started. These initial insights can help people make more informed decisions about their money.

3)  Find a support system – It’s important for people to remember they don’t have to go at this alone. Talking to a trusted person about finances can help people wrestle with their emotions, discover their behavioral patterns, chart a clear path forward, and stay accountable to a strategy.

A financial advisor can be a sounding board for changing or competing financial goals. They can meet people where they’re at today – whether it’s starting from scratch or building more advanced financial strategies.

Thrivent’s survey found, however, that money may be a barrier to people seeking out help. Fifty-two percent of those surveyed said they’d seek out advice on financial planning/strategy if they had more money. This is especially true for those who feel financially off track, with 62% saying they don’t have enough money to pay for advice.

A support system can come in many shapes and sizes, and not all cost money. Today, there are plenty of free resources to help people get organized. Thrivent’s Money Canvas program, for example, offers free online coaching sessions to help individuals build a baseline understanding of their financial picture and establish healthy budgeting, saving and spending habits. Participating in these kinds of programs can help people create more breathing room in their finances.

4) Strengthen the financial foundation – People should consider three initial steps to help strengthen their financial foundation in the immediate term, including:

  • Modifying their budget – With higher prices driving up expenses, people should reevaluate their budget and make spending tradeoffs to continue living within their means. Depending on what their priorities are, people can find ways to scale back, like shopping smarter at the grocery store or eliminating recurring subscriptions. Finding a way to cut back even $25 to $50 a week frees up an extra $100 to $200 a month that can be dedicated to other purposes.
  • Establishing an emergency fund – It’s important people don’t lose sight of their emergency savings during this time. A good rule of thumb is to save enough to cover three to six months of expenses. Due to inflation, people may want to increase the amount they’re putting away from every paycheck.
  • Managing debt – For those with debt, devise a strategy for tackling it. Depending on the amount, people may want to prioritize paying smaller debts first and then work their way up to the largest amount. Or they can focus on paying the debt with the highest interest rate first. Consolidating debt may be a third option.

5) Revisit investments – To help minimize the long-term effect of inflation on the growth of assets, now is an ideal time for people to revisit their risk tolerance and compare it to their investment allocation. If needed, a financial advisor can help individuals diversify their portfolio to better match their current risk tolerance, investment objectives and time horizon.

“This advice reminds us that we can take control – and even improve – our financial situation despite the challenging environment we’re in. But it all starts with a thorough review of our priorities and overall financial picture,” added Fortin.

While inflation is the challenge in front of us today, it may be something completely different tomorrow. A holistic plan is one of the best forms of preparation we have. It can turn financial uncertainty into clarity, allowing us to achieve our most important goals so we can lead lives filled with purpose.

1Consumer Price Index (Bureau of Labor Statistics)

About Thrivent

Thrivent is a diversified financial services organization that helps people achieve financial clarity, enabling lives full of meaning and gratitude. Thrivent and its subsidiary and affiliate companies serve more than 2.3 million clients, offering advice, insurance, investments, banking and generosity products and programs over the phone, online as well as through financial professionals and independent agents nationwide. Thrivent is a Fortune 500 company with $189 billion in assets under management/advisement (as of 12/31/21). Thrivent carries an A++ (Superior) rating from AM Best, a credit rating agency; this is the highest of the agency’s 13 rating categories and was affirmed in June of 2022. Rating based on Thrivent’s financial strength and claims-paying ability. Does not apply to investment product performance. For more information, visit Thrivent.com. You can also find us on Facebook and Twitter.

Insurance products, securities and investment advisory services are provided by appropriately appointed and licensed financial advisors and professionals. Only individuals who are financial advisors are credentialed to provide investment advisory services. Visit Thrivent.com or FINRA's BrokerCheck for more information about Thrivent's financial advisors.

About Morning Consult

Morning Consult is a global decision intelligence company changing how modern leaders make smarter, faster, better decisions. The company pairs its proprietary high-frequency data with applied artificial intelligence to better inform decisions on what people think and how they will act. For more information, please visit morningconsult.com.

*Methodology
This general population research was conducted in partnership with data intelligence company Morning Consult and polled 2,221 adults across the country between May 9 and 17, 2022. The interviews were conducted online, and the data were weighted to approximate a target sample of nationally representative adults based on age, gender, ethnicity, income, geography. Results from the full survey have a margin of error of +/- 2 percentage points.

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