Financial security is a safety net that can give peace of mind. It lets people comfortably and confidently meet their existing bills and unexpected expenses. Unfortunately, most Americans lack financial security. WalletHub’s nationally representative Financial Insecurity survey reveals insights into the disconnect between how Americans perceive their finances and what their financial situation in reality looks like.
Check out the facts from this survey.
More Americans Feel Financially Insecure
64% of people admit feeling insecure about their financial situation.
This insecurity is primarily driven by a high inflation rate, rising cost of living, stagnant salaries, and large debts. People are living paycheck to paycheck and unable to afford essentials. However, poor money management wouldn’t be incorrect to consider as another reason for financial insecurity.
Financial Situation Impacts Mental Health
More than one in four Americans say their financial situation impacts their mental well-being.
One more survey confirms this fact. It was found that 65% of Americans consider finances the most significant source of their stress and 42% avoid looking at their checking account balance out of fear. Financial discontent can lead to anxiety and depression. Poor mental health can have undesirable implications on their physical health, relationships, and professional commitments.
Financial Status Equates Self-Worth
41% of Americans believe that their financial status defines their self-worth.
People often consider their wealth as an indicator of their success. They feel their financial achievements are closely associated with a distinct identity, power, and validation. While financial stability is necessary, it shouldn’t be the sole metric for self-worth. Happiness in relationships and personal values such as courage, honesty, and kindness define self-wroth, too.
Appearing Financially Successfully Matters
10% of Americans believe that appearing financially successful to others is more important than having money in their bank account.
People pretend to be rich or wealthy to boost their social image. It is their way of stopping feeling shame and embarrassment for not having enough money. In fact, ‘fake rich’ is a worrisome new social media trend that is influencing millennials. Fulfilling financial aspirations makes better sense when one has money to do it.
Unjustifiable Spending on Physical Appearances
16% of Americans spend more than they should on shoes, clothes, and beauty services for their appearances.
This fact supports a survey showing Americans spend $722 yearly on good looks as they struggle with self-consciousness. The estimated annual spend on apparel and footwear is nearly $2200. Mindfully spending money on self-care and wellness is advisable, and not for reasons such as social acceptance and approval.
Financial Comparison
20% of Americans admit often comparing their financial standing to others.
Manisha Thakor, author of the book ‘MoneyZen: The Secret to Finding Your Enough’ says that people fall for false financial comparisons for three reasons: fictional financial lifestyles, easy access to credit, and social media. One should remember that everyone’s financial condition is unique. It depends on their education, career choices, and money mindset. People flaunting their wealth may not necessarily be as well-off as they pretend. Hence, it is advisable to stay away from financial comparisons.
Being Rich is a Priority
39% of Americans say that being rich is their top priority.
Now, the question is how much money is enough to become rich. According to another survey, Americans would need to earn $520,000 on average to feel rich and 23% think that one million is what they should have to be rich. While this figure may vary from person to person, it is important to understand that there is no shortcut to rapid wealth. One should focus on building financial wealth through smart, strategic, and long-term investing.
Americans Use Money to Feel Good
74% of Americans say that they spend money to improve their mood.
Spending money occasionally on things, activities, and enjoyable experiences is normal. However, it becomes a concern when money becomes a coping mechanism. A survey revealed that 69% of Americans are guilty of emotional spending, and 76% of them tend to overspend. One shouldn’t let one’s emotions drive one’s financial behavior—it may give an endorphin kick, but only temporarily.
Hesitation to Seek Financial Advice
33% of Americans say their pride or embarrassment prevents them from asking for financial advice.
Not many people understand that financial advice is crucial to managing money with discipline and consistency. While one can take this advice from family and friends, it is recommended to consult a professional. Financial experts consider their client’s age, dependents, income, liabilities, and financial goals to plan for savings, investments, and wealth creation.