Many Americans may be putting finances at risk as they make health their top priority for 2021
An increase in certain bad financial habits – likely brought on by the pandemic – could be one reason why Americans are feeling more stressed this year.
After a volatile year driven by the COVID-19 pandemic, the majority of Americans understandably say health and wellness is their top priority for 2021. Unfortunately, however, this may come at the expense of their long-term finances at risk, according to a new study conducted by Allianz Life.
Only 27 percent say financial stability comes first, while just 13 percent are including financial planning as a resolution in 2021, which is an 11-year low.
“This has certainly been a unique year fraught with unforeseen challenges, but it is still surprising to see people even less focused on finances, particularly given high unemployment, forced early retirements and other risks to financial security that many experienced in 2020,” said Aimee Johnson, vice president of Advanced Markets and Solutions for Allianz Life. “There’s no doubt that there is great value in improving one’s health and wellness, but now more than ever, financial health needs to remain top of mind.
“Poor money management can negatively affect your health because of the stress that can be caused by fretting over impacted financial plans. It does not need to be a Catch-22 though, as it is completely possible to address both personal and financial health in 2021.”
An increase in certain bad financial habits – likely brought on by the pandemic – could be one reason why Americans are feeling more stressed this year. More people say they are spending too much on things they don’t need (32 percent,) and saving some, but not as much as they could (27 percent,).
These bad financial habits saw the biggest increase among millennials. More than four in 10 report spending money on things they don’t need, and nearly the same amount say they are not saving as much money as they could. As a result, more than half of millennials report feeling stressed specifically about their finances.
Despite so few saying they will include financial planning in their resolutions for 2021, not all of the financial planning news is bad. More Americans (88 percent) expect their financial situation to improve or stay the same next year rather than get worse (12 percent), and more than a third say they reduced their overall spending since the start of the COVID-19 pandemic.
There is still room for improvement, because only about one-quarter of Americans say they are likely to work with a financial professional in 2021, the same amount who were looking for more financial planning help heading into 2020.
“Although most people would understandably like to leave 2020 in the past, it’s important to take away lessons where we can, and the value of having a solid financial plan certainly applies,” Johnson said. “If 2020 taught us anything, it emphasized the idea that anything can happen, and we need to be prepared for the unexpected. Financial professionals can be a huge benefit in helping people identify risks to their finances and prepare accordingly.”
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