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Money and Your Goals
2020: Opportunity for Redirection
July 9, 2020
Current events are offering an unprecedented opportunity to take stock of our priorities – and how they inform our plans.
In the midst of global crisis, Americans are spending and saving differently. CNN reports that the savings rate – the ratio between a household's savings and disposable income – spiked from 8% in February to 13.1% in March – the largest such increase since November 1981. At the same time, Federal Reserve Bank research reveals that revolving-credit activity decreased 31% in March, as compared to March 2019 rates.
How might these economic findings impact your household? They reveal that the events of 2020, however challenging, are compelling many families and individuals to re-evaluate and refocus their priorities and financial habits in lasting, positive ways – some practical, some more profound.
Taking stock: What matters most
Though sheltering in place is perhaps the easiest way to reduce discretionary spending, is there more behind these reactions to the crisis than simple pragmatism? Dr. Susan David, a Harvard psychologist speaking with The Guardian, says crisis can become "Genuinely formative. There is enormous growth and power that can come from it."
Two recent studies show formative shifts in what Americans deem important in their personal lives. An ongoing study of 73 million adults' values and behaviors during the pandemic by research firm Resonate, places "safety" and "security" at the top of its list. The laggard: "Independence." Another study of 1,000 adults by The Human Project, lists among its top 10 priorities, "protecting the family," "thrift" and "helpfulness." These have replaced former high-charting values like "power," "status," and "self-Interest," among others.
How trends inform our planning
Though these shifts make for interesting reading, they may also impact your planning. Donald Knoernschild, a Thrivent financial professional in Searcy, Arkansas, sees clients gravitating to safety and security as they consider protecting what matters to them: "Because of COVID, people are thinking much more about the long-term for their protection. They've seen the disaster of what's happened in some of the nursing homes. They want to know that they can meet their health care expenses – or, if needed, the means to afford a higher quality health care facility."
Knoernschild also points to a greater focus on long-term disability income insurance: "We may ask an unemployed client to imagine their time out as a long-term disability event. 'How would this impact your family?'"
On an even broader level, Karli Finney, a Thrivent financial professional in Grand Forks, North Dakota, adds: "We understand these economical and global changes – and the need they create for protection." Part of that protection, notes Finney, is working with a financial professional.
Teach your children well
Just as important as having professional advice is how you pass along key financial lessons to your children. Homeschooling, the new normal in many places until further notice, is an opportunity do this. These resources can help:
- The Consumer Financial Protection Bureau's Money as You Grow series offers lessons, grouped by age, on budgeting, spending, investing and other key topics.
- The Mint's interactive activities, quizzes, and calculators engage kids of all ages.
- High school students can learn from Khan Academy's extensive list of video lessons.
Make good on 'helpfulness'
Your household can work through local community and religious organizations to support the greater good. Idealist.org, a hub for volunteering, also lists ways to help during the current pandemic, including checking in on elderly neighbors and those living alone or contributing money or groceries to your local food bank. If you can’t find a volunteer group in your area, Idealist can help you find one or even create your own mutual aid group to address your community's specific needs.
- Habits: https://www.thrivent.com/magazine/2018/september/get-in-the-habit.html
- com: https://www.cnn.com/2020/05/12/investing/jobs-coronavirus-consumer-spending-debt
- com: https://www.statista.com/statistics/246268/personal-savings-rate-in-the-united-states-by-month/
- The Guardian: Positive power of trauma (Dr. Susan David): https://www.theguardian.com/lifeandstyle/2020/apr/03/coronavirus-priorities-what-we-leave-behind
- Institute for Public Relations,org: Study on shift in specific values: https://instituteforpr.org/a-pandemic-shift-americas-return-to-depression-era-values/
- Advertising Week 360.com, The Human Experience study: https://www.advertisingweek360.com/consumers-personal-values-have-changed-has-your-brands-message/