How Consumers Feel About Finances in 2024
February 12, 2024 | 1 min read
U.S. consumers have a strong sense of personal financial goals, but they struggle to achieve them, according to our latest survey in our ongoing original research that reveals people’s perceptions around finances. To get specific, 66% of people say they want to save more money, 48% say they want to reduce or avoid debt, 40% say they want to improve their spending habits, and 20% are focused on investing or entrepreneurial ventures.
Unfortunately, two-thirds of respondents say they experience financial hardship at least occasionally, with 15% saying they experience it almost constantly and 19% saying they experience it somewhat regularly. Unsurprisingly, those who make less than $50,000 a year are far more likely to say they experience hardship — even though 24% of those with higher incomes still say they experience it at least somewhat regularly.
When it comes to how people say they spend their money, some respondents had a difficult time pinning down exact ratios. On average, people say they commit 60% of their income to necessary expenses, 28% to personal spending, 25% to paying down debt, and 21% to savings and investments. Given that these percentages add up to more than 100%, it’s clear that people tend to lack precision in their estimates, which implies that they really don't know where their money is going, much less how to adjust their spending to achieve their goals.
So, what can the banking industry do about all of this?
Here are a few suggestions.
This is an enormous opportunity for banks, credit unions, and fintech companies alike. As Bradley Leimer, Co-founder at Unconventional Ventures says, “Banks need to make customer lifetime value actually translate to a lifetime value from the financial provider — not the other way around.” Forrester Research adds, “Focusing on customer loyalty is no longer just a smart strategy. In an age of empowered customers, it is an imperative.” By offering and then promoting intelligent financial guidance, financial services companies can produce an experience that builds life-long brand loyalty and increases engagement with customers.
The end goal here is to empower people to be financially strong, such that they create a mutually benefiting relationship with their financial services provider. To figure out what people say financial health looks like in more concrete terms, we asked respondents for their definition of the term. What we found was that, more than any other option, people think of financial health as “the freedom to not worry about money.”
Companies that can offer a solution that helps on this front by automating the complex and burdensome process of navigating finances will help people increase their savings and income and achieve true financial health. Companies that are flatfooted on this front, by contrast, will likely miss out on the return on investment such programs bring.
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