Findings suggest the pandemic is affecting holiday spirits and spending, but those with a financial strategy are more likely to feel optimistic and increase their charitable giving.
MINNEAPOLIS — Heading into the holiday season, a new survey from diversified financial services leader
According to Thrivent’s Holiday and 2021 Outlook Report, 39% of respondents plan to spend less on gifts in 2020 versus 2019, while 44% said they were less excited about the season. The survey was conducted in partnership with data intelligence company
“At Thrivent, we believe a purposeful approach to finances makes it possible to live a life of meaning and gratitude, even during a year like 2020,” said Thrivent president and CEO Terry Rasmussen. “The survey confirmed the negative impact we expected COVID-19 would have on spending and excitement. However, we were reassured to see more positive sentiment among those who have a financial strategy versus those who don’t, regardless of income level.”
Survey findings showed that those who have a financial strategy are more excited about the holiday season and gave more to charities this year. For example:
- 21% of those with a financial strategy said they were more excited than usual about this holiday season; only 12% of those without a financial strategy said they were more excited than usual this year.
- Those with a financial strategy were 13 percentage points less likely than those without a financial strategy to cite financial concerns as a reason why they are less excited about the holidays.
- 21% of those with a financial strategy said they contributed more money to charities in 2020 than they did in 2019; for those without a financial strategy, only 8% said they contributed more money to charities in 2020 compared to 2019.
The benefits of a financial strategy
Looking ahead to the New Year, only 19% of all respondents are feeling more optimistic about their finances than they did at this time last year; 39% are feeling the same; and 40% are feeling less optimistic.
All respondents felt a shared sense of concern about their financial outlook:
- 67% of adults said they felt more “anxious” than “excited.”
- 61% of adults said they felt more “stressed” than “calm.”
However, when looking more closely at responses from those who have a financial strategy and those who don’t, there is a noticeable difference in terms of outlook going into 2021.
- 40% of those with a financial strategy are feeling “excited,” but that percentage drops to 25% for those without a financial strategy.
- 44% of people with a financial strategy are feeling “calm,” but that percentage drops to 34% for those without a strategy.
- 70% of respondents with a financial strategy are feeling “focused,” but that percentage drops to 52% for those without a strategy.
“It’s encouraging to see these survey results reinforce the idea that being intentional about personal finances, even in the midst of uncertainty, can reduce stress and provide clarity,” said Patrick Egan, director of financial guidance with Thrivent. “With the right financial advice and tools, people are not only more likely to thrive in the long-term but also navigate the complexities of the near-term with increased confidence and generosity. Despite the market volatility and economic uncertainty this year, there are still steps people can take to achieve financial clarity.”
Thrivent offers the following four suggestions for people looking to finish the year strong when it comes to their finances.
1. For those who don’t have a financial strategy, consider creating one.
People often think of financial strategies as complex, multi-faceted plans – and some certainly can be. But they shouldn’t be intimidated; a financial strategy can be as simple or complex as they need it to be. A personalized financial strategy can help them make the most of their financial resources. It takes into account their current financial situation and their goals, values and beliefs to help them live a life full of meaning and gratitude.
“It seems counterintuitive, but by looking at their financial picture now, people can regain a sense of control as they think about their near- and long-term goals, even if it initially makes them feel a little anxious,” Egan said.
2. Simplify by consolidating accounts.
For people who have worked more than one job, chances are they have old IRAs and employer retirement plans. The beginning of the year is a good time to consider combining various accounts into one. It can be easier to track and will help people simplify their financial snapshot.
3. Get an asset allocation check-up.
Individuals who have a financial strategy should meet with their financial professional to revisit how they’re allocating assets. Now is an excellent time to have a conversation about risk tolerance—especially given the current environment.
It’s important to look at a portfolio’s mix of investments, particularly in light of the economic turmoil of 2020. The stock market has gone through incredible shifts this year and it’s important for people to revisit their financial portfolio to make sure their investment strategy is still on track with their goals in light of these changes.
4. Understand the impact of the low interest rate environment on personal finances.
Historically low interest rates provide an opportunity to look at debt. Low interest rates can affect everything from credit card annual percentage rates (APRs) to mortgage and refinancing rates. Now is a good time for people to see if they can lower the amount they pay in interest over the long-term.
Depending on the purpose of the money, now may also be a good time to talk about how to get a better rate of return on elements of financial savings. “We’ve never seen interest rates this low. For those who are saving in more conservative products like savings accounts, money market accounts or CDs, the low interest rate environment is hampering returns,” Egan said. “A financial professional can help individuals look for other ways to maximize their savings in balance with their risk tolerance.”
Longer-term financial goals remain largely on track
Despite the overall financial impact of the pandemic, Americans’ longer-term financial goals seem to remain on track for the time being.
- When asked to identify their primary financial goal in the New Year, respondents shared the following top three areas:
- 33% said paying off debt.
- 25% plan to focus on building up emergency savings.
- 17% have a primary goal of saving for a large purchase, like a home, car or vacation.
- 20% of respondents with a financial strategy will prioritize saving for retirement; only 8% of respondents without a financial strategy will prioritize saving for retirement.
- For those with a financial strategy, 56% said 2020 did not have an impact on their retirement plans; for those without a financial strategy, only 32% said 2020 did not have an impact on their retirement plans.
- 45% of respondents with a financial strategy will continue investing at the same amount in 2021 and 28% plan to invest more; only 30% of respondents without a financial strategy will continue to invest the same amount of money in 2021 and 17% plan to invest more.
Thrivent believes money is a tool and not a goal. Driven by a higher purpose at its core, Thrivent is a membership-owned, holistic financial services organization that is committed to providing financial advice, investments, insurance, banking and generosity programs to help people make the most of all they’ve been given. For over 100 years, Thrivent has been helping people build their financial futures and live more generous lives. Today, it’s a Fortune 500 company that offers a full range of expert financial solutions, serving more than 2 million clients, as well as the communities in which they live and work. Thrivent has also been recognized as one of the World’s Most Ethical Companies for over nine years by Ethisphere, a global leader in defining and advancing the standards of ethical business practices.
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