- 77% of respondents consider financial care a form of self care and rank financial health as a top priority
- More than two thirds of respondents say they’ve experienced stress or anxiety relating to their finances
- Of those who took on debt to fund summer spending, over half were Gen Z or Millennials
Self care, a trend that started well before the pandemic, has now cemented itself into our culture as permission to step away from our busy lives to take care of ourselves. The concept was so novel it led companies and brands from nearly every industry to “pivot to wellness”, giving consumers ample ways to decompress and feel better. Then the pandemic happened, amplifying the need for self care and exposing the fragility of peoples’ mental and financial wellbeing. Now, consumers are focused on a new form of self care — and it starts with their wallets.
According to a study conducted by Qualtrics on behalf of Credit Karma, 77% of respondents consider financial care a form of self care, with 73% confirming financial health is a top priority for them, above more traditional forms of self care, including physical fitness and the pursuit of one’s passions. This was especially true among younger generations whose financial stability could be considered more at risk.
According to the study, nearly two thirds of Gen Z and millennials said the COVID-19 pandemic forced them to prioritize their financial health.
Financial stress on the rise amidst global pandemic
Finances are a major source of stress for most people. In fact, more than two-thirds of respondents admit their finances have caused them to experience stress or anxiety with roughly three quarters of Gen Z and millennials feeling the same. Among those who have experienced financial stress, the most common trigger was not having enough money saved for the future, followed by the feeling of living paycheck to paycheck and not having an emergency savings fund.
Here’s a breakdown of common financial situations that trigger stress or anxiety among consumers:
|Which of the following personal finance situations, if any, is likely to trigger your stress or anxiety? Please select all that apply.|
|Not having enough money in savings for my future||49%|
|I am living paycheck to paycheck||44%|
|Lack on an emergency savings fund||43%|
|Paying down credit card debt||30%|
|I do not have any money saved for retirement||29%|
|Fear of losing my job or income||24%|
|Not having enough money to buy a house one day||20%|
|Not having enough money to buy a car||18%|
|Paying down student loan debt||13%|
|I do not know how to invest my money||12%|
Talk financial care to me
Practicing financial care starts by implementing smart financial habits into your daily life that will set you up for long term success. For many that starts by living within your means. According to the study, more than half of respondents say they spend within their means and make regular on-time payments toward bills, with one third reporting they even budget for day to day expenses. However, maintaining these habits proves harder for some than others.
Of all respondents, Gen Z was the least likely generation to report spending within their means, with just 31% saying they do so, compared to 50% of Gen X and 70% of Boomers+.
Financial care takes the backseat as economies reopen across the country
While most respondents indicated financial care is a top priority, many fell behind as economies reopened nationwide. According to the study, 28% of respondents spent more money this summer compared to last, with 39% of Gen Z and 35% of millennials saying they spent more. To finance their spending, 28% of millennials took on debt, as did 23% of Gen Z. Of all respondents who took on debt, 60% borrowed more than $1,000 and one third took on more than $2,500.
For Gen Z, dining out and shopping for new clothes and accessories ranked as the top two spending categories this summer. Here’s a breakdown of the top spending categories for each generation:
|Which of the following categories did you spend the most money on this summer? Please select your top 3.|
|Gen Z||Millennials||Gen X||Boomer +|
|Family/ pet expenses||28%||29%||31%||35%|
|New clothing or accessories||40%||29%||31%||22%|
|Vacation or weekend trips||19%||26%||32%||26%|
Communication is key when it comes to financial care
Part of financial care is getting comfortable with talking about finances with people you trust. However, opening up about finances can be difficult because of deeply rooted cultural stigmas associated with talking about money. According to the study, more than half of respondents said they believe talking about finances is more taboo than discussing one’s dating life or even talking about therapy.
“The pandemic served as a forcing function to get people to pay closer attention to their finances, leading many to prioritize their financial health above all else. However, if the study tells us anything, it’s that financial care is more than just intention setting, it’s a regular practice that requires consistency and discipline,” said Colleen McCreary, consumer financial advocate at Credit Karma. “Like any wellness practice, it’s important to set clear intentions and map out what steps — no matter how big or small — you need to take to reach those goals. From there, do your best to remain thoughtful about those intentions, especially as we return to more normal times and the desire to spend to make up for lost time arises.”
On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in August 2021 of 1,044 Americans, aged 18 and above, to better understand their feelings toward financial health as a form of self care.