According to the Federal Reserve's 2023 Survey of U.S. Household Economic Well-Being, many Americans feel financially anxious, but a surprising 31% of Americans report having no financial concerns.
But a detailed survey released in May 2024 paints a worrying picture for Americans' financial well-being: 72% of respondents said they were at least financially OK, down from 73% in 2022 and a significant drop from their post-pandemic high of 78% in 2021. This is the lowest rate since 2016, revealing a decline in economic health.
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Inflation remains the biggest concern
One of the main reasons for the overall decline in economic well-being is the steadily rising cost of living that continues to put a strain on household budgets. The survey found that concerns about high prices have risen from 33% in 2022 to 35% in 2023. This is another big increase considering that in 2016, the last time the Federal Reserve asked this question in the survey, only 8% of respondents cited inflation as a concern.
Indifferent 31%
Despite these challenges, a significant portion of the population (31%) reports that they have no financial worries. This number is up from 28% in 2022, but still lower than the 53% reported in 2016. While the percentage of people reporting they are financially stable has dropped significantly over the past seven years, many people still appear to be unaffected by economic fluctuations.
Factors contributing to financial exemptions
Higher income levels, stable employment, and sound financial planning (including budgeting, saving, and investing) form the foundation of financial security. Diversification and large savings further insulate people from financial pressures.
But arguably, one of the most empowering factors is access to financial education and resources. Understanding personal finance concepts like compound interest, investment strategies, and debt management gives people the knowledge to build and maintain financial health. Most importantly, educational resources demystify financial planning and remove barriers to making proactive financial decisions.
Increase in income level
People with sufficient incomes often have more disposable income, making it easier for them to save more, invest in different assets, and absorb economic shocks more effectively.
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Stable employment
There's little to talk about financial security without steady employment. People who have stable jobs can feel financially secure, especially in industries that are less vulnerable to economic instability.
Sound Financial Planning
People who prioritize budgeting, saving and investing are better prepared for financial challenges. Effective financial planning includes setting aside an emergency fund, managing debt wisely and making educated investment decisions. A solid savings account is the best way to cover unexpected expenses like medical bills and home repairs without putting a financial strain on your finances.
Diversified Investments
Many financial advisors will talk about the importance of diversification to financial stability. By investing in a combination of stocks, bonds, real estate, and other assets, nearly anyone can protect their portfolio from market fluctuations. What's more, diversification also reduces the impact of poor performance of any single investment.
Conclusion
Federal Reserve survey results paint a mixed picture of the financial health of the United States. Although overall financial health has declined slightly, a significant percentage of the public remains apathetic about their financial situation. This imbalance highlights the importance of financial literacy, planning, and the need for policies that address the concerns of those struggling with economic insecurity.
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The article, “Why One in Three Americans Feel No Financial Worry at All,” originally appeared on Benzinga.com.
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