Depressed about financial situation? You're not alone
Many follow parents' financial example observed in childhood -- but is that working for them?
Many Americans are uneasy about their financial situation thanks in part to the economic impact of COVID-19. U.S. respondents to a recent survey by global financial wellbeing platform nudge Global were more likely than respondents from other countries to say they felt depressed about their current financial situation.
“Our research found that Americans are 65 percent more ashamed, anxious, and depressed than the rest of the world about their financial situation,” said Jeremy Beament, co-founder and director of nudge Global.
“This news comes as a surprise, given the U.S. has seen a much faster post-pandemic economic recovery than the rest of the world. For example, OECD announced that America is forecast to reach pre-pandemic per capita income levels after only 18 months, while Europe is expected to take nearly 3 years to recover.”
This promising economic forecast hasn’t translated into optimism in the lives of everyday Americans, said Beament. The study found 45 percent of Americans feel depressed about their financial situation, compared to a global average of 34 percent.
This figure worsens for American women (46 percent) and those earning below $35,000 (52 percent).
Americans are also feeling great anxiety around their financial circumstances, with American women feel significantly more anxious (56 percent) than men (38 percent). Millennials were the most anxious age group, according to the study.
Furthermore, as many as four in ten Americans said they feel excluded from the personal finance ecosystem, according to the firm’s 2021 global financial wellbeing report.
The situation is even more pronounced for women and Black Americans, many of whom indicated they believe the financial deck is stacked against them and that access to wealth creation is often unfair.
However, the report noted the importance of people taking ownership of their financial situation in the wake of the pandemic, with governments around the world accumulating $20 trillion in new debt, which could impact social care and retirement provisions down the road.
Education may be key to improving people’s financial situation, but around the world, respondents indicated that traditional financial education has let them down.
The report discovered that many people mirror their parents’ financial behaviors or seek help from social media. Forty-eight percent of Americans said they attribute their personal financial choices and current financial status to their upbringing.
However, 21 percent of Americans indicated they have nobody in their lives to teach them how to manage their money and 15 percent said they learned how to manage money at school.
One-quarter of Gen Z is relying on TikTok videos for personal finance advice, and 18 percent of all Americans are learning about personal finance from YouTube videos.
There has been a positive global breakthrough, as more financial education is now being taught in schools. Nineteen percent of Gen Z respondents reported receiving financial education vs. only 8 percent of those older than 55. Gender and ethnicity imbalances extend to financial education as well, the report found.
“When it comes to increasing inclusion within the retirement ecosystem, there is a need for wider education powered by inclusive technology that takes into account salary, ethnicity, gender, dependents and other social situations that impact retirement planning,” said Beament.
“Financial wellbeing technology that incorporates these differences with targeted unbiased education with cues informed by behavioral psychology can increase the likelihood of positive financial outcomes. Having the right skills and knowledge empowers people to make informed financial decisions relevant to their circumstances – in this case, helping people to progress their retirement savings in a way that will prove invaluable to them down the line.”
Employers can play an important role in closing financial gaps, although just more than half of Americans said they do not work for an employer who offers personal financial education as an employee benefit.
Employers should be aware of their employees’ financial aspirations in order to best support them. The report found Americans were most focused on having enough money to pay their bills or pay off debt, or to be able to retire early. Employers struggle to tailor personal financial advice to their employees because many employers are unaware of key information including how many people their employees’ salaries support.
“Money touches every part of our lives and carrying around financial stress and anxiety significantly detracts from overall wellbeing,” said Beament.
“U.S. employers are in a unique position to be able to provide financial education and help people maximize their financial circumstances. This support is especially critical for helping groups that feel excluded from the financial industry. Organizations can play a critical role in providing trusted skills and knowledge to help employees navigate this time of financial uncertainty.”
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.
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