Rethinking goals, debt and financial planning in wake of pandemic
Let's take a vacation! Well, maybe. What about emergency funds? NY Life study examines financial goals of Americans in the pandemic-post pandemic year.
The past year has been a financial wakeup call for many Americans. The economic fallout from the pandemic has forced people to take a hard look at their financial situations and plan for the future.
New York Life recently took the financial pulse of 2,200 adults in its recent survey. Respondents shared their opinions about financial goals, debt and financial planning.
Long-term goals. The top selection among all age groups, except Gen Z, when asked about long-term financial goals was building their emergency funds (between 40 percent and 42 percent). Millennials more often indicated that they are saving for a down payment on a home than all adults (25 percent vs. 14 percent), as well as to pay off student loans (13 percent vs. 8 percent).
Short-term goals. Vacation was the most popular selection among all age groups (between 31 percent and 34 percent) except Gen Z respondents, 40 percent of whom chose buying a specific product they want. Millennials were twice as likely to include starting their own business as a short-term financial goal than all adults (18 percent vs. 9 percent).
Within each group that selected a certain financial goal, respondents have the highest confidence in being able to manage paying for a vacation and paying off credit card debt, and the least confidence in paying off student loan debt and affording a down payment on a home.
A majority of adults (67 percent) said they have received a stimulus check to supplement their income in the past year. Respondents said they put this extra income most often toward daily expenses (45 percent), paying off credit card debt (23 percent) or building emergency funds (21 percent).
Debt. One in three adults said their debt is causing them anxiety, followed by fear of having to pay for an emergency (24 percent). More than half of adults (53 percent) stopped making payments or reduced their payments on student debt during COVID-19. Of those, 49 percent said they were putting it toward daily expenses instead.
Financial planning. Three in four adults said they absolutely or somewhat know what they are doing when it comes to their financial strategy. A plurality of respondents (20 percent) said they would put off a vacation to make up for an unexpected emergency expense, followed by building emergency funds (17 percent) and buying a product they want (15 percent).
Gen Z respondents were less likely than all adults (39 percent vs. 53 percent) to say they had a financial strategy before COVID-19. Of those who indicated they had a financial strategy before the pandemic, a majority (64 percent) said they were somewhat or completely prepared.
A majority (58 percent) of those who had a financial strategy before COVID-19 and did not already work with a financial professional said the pandemic did not affect the likelihood that they would seek assistance from financial professionals. Millennials were the most likely to say they were much or somewhat more likely to seek assistance from a financial professional.
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