Post-Pandemic Personal Finance Trends

If you’ve seen your spending and saving habits change during the pandemic, you’re not alone. Although the pandemic has been a shared, global experience, everyone’s individual experience has varied; some individuals experienced shifts that have opened new doors, and some have been forced to re-evaluate and readjust their budget and lifestyle.

As we enter what we hope will be a post-pandemic era, researchers have been curious to learn more about our individual and collective pandemic experiences and have started to identify some trends in the realm of personal finance. Let’s take a closer look at what one recent study has found…

Confidence and Resilience

84% of Americans surveyed in a 2020 Planning and Progress Study believe that the pandemic will impact their ability to achieve long-term financial security in some way, and nearly 60% believe the impact will be moderate or high. Despite the impact, however…

• 76% believe they will achieve long-term financial security in less than 5 years (44% believe that will happen in a year or less), and
• 79% are confident that the country will return to economic growth (nearly 50% believe that will happen in a year or less).

We find these results to be very encouraging. As those in the Yeske Buie community know well, our worldviews, the core beliefs that guide our advice and actions, are based on fundamental (or realistic) optimism. Many people have seen drastic changes to their finances both in positive and negative ways, and yet this study suggests that the challenges haven’t broken Americans’ spirits.

Increased Financial Discipline

For some people, the pandemic stirred up great financial challenges in the form of business closures, reduced pay, and unemployment. In order to pay for their living expenses during the pandemic…

• 19% of people surveyed had to dip into their personal savings or emergency funds,
• 13% borrowed money from family or friends, and
• 9% had to dip into their retirement savings (401(k), IRA etc.).

As a result, many individuals were forced to go back to the drawing board and readjust their budget to fit within their means. A positive effect of this hardship, however, was an increase in financial discipline.

• The survey showed a 10% drop in Americans’ views (post-pandemic) that they needed to improve their personal finance skills, and
• It also showed a 6% increase in those who consider themselves “highly disciplined” in personal finance post-pandemic.

 A Desire for Financial Planning 

A similar study conducted in 2021 shows that the interest and desire for personal financial planning has also changed as a result of the pandemic.

• 83% of survey respondents said that they either created, revisited, or adjusted their financial plan during the pandemic, and
• 95% say they expect that the personal finance habits they adopted during the pandemic will stick around including…
  • Reducing living costs/spending (45%)
  • Paying down debt (34%)
  • Increasing investing (33%)
  • Regularly revisiting financial plans (29%)
  • Increasing retirement contributions/savings (25%)

It’s encouraging to us to read that many are starting to see the value in financial planning and are forming relationships with financial planners. Our mission is to empower people to pursue their Live Big lives, and one of the ways we think that happens is by helping people understand their finances to make educated decisions in our ever-changing world.

Summary 

If you or someone in your personal network feel like you’re exploring new territory related to your finances, please know that we’re always available to connect! We like to say that we are great people to think with, and we appreciate every opportunity to walk an idea around the block with someone as they consider any and all decisions impacting their financial life.

Overall, we are encouraged by the trends that are happening before us and the growing interest in wanting to be more in-touch with one’s financial plan and goals. This behavioral shift is one that we certainly support, and we look forward to continuing to help people feel more informed and comfortable with the financial path they are on.

RESOURCES

• Rae, David. How Will the Coronavirus Impact Your Finances? Forbes. September 19, 2020.
• Planning and Progress Study 2020. Northwestern Mutual.
• Planning and Progress Study 2021. Northwestern Mutual.