Americans don’t feel optimistic about their finances in 2019—and it may be because they are one emergency away from disaster.
A pair of recent Bankrate surveys illustrated the doom and gloom surrounding the average household’s financial thinking and the precarious state of personal finances among many Americans.
A survey of 1,000 U.S. adults taken in December 2018 reported that a slim majority, 55 percent, did not believe that their personal financial situation would be better in 2019 than it was in 2018—including 12 percent who believed that their finances would deteriorate during the new year. A separate Bankrate survey conducted in January 2019 found that, among 1,005 American adults, only 40 percent would be able to pay an unexpected $1,000 expense from their own savings.
When Bankrate asked Americans about their 2019 financial outlook in December, the pessimistic respondents found plenty of factors to blame: Nearly half, 49 percent, blamed political leaders in Washington, while 38 percent blamed increases in their cost of living, 37 percent said increased debt, 21 percent said lower returns from savings and investments, 19 percent cited rising interest rates and 18 percent blamed the fact that they were making less money at work.
On the other hand, 44 percent of that survey’s respondents felt that 2019 would be better for them, financially speaking, than 2018. Millennials—aged 18 to 37—were significantly more optimistic than respondents as a whole, with 59 percent saying that their personal finances would improve, while only 35 percent of respondents older than 37 said so.
The December survey’s optimistic respondents also found several reasons for their positive outlook: 52 percent said they were making more money at work, 38 percent reported lower levels of debt and 17 percent cited higher returns from investments and savings as likely reasons.
Respondents in the December survey also identified paying down their debt as their primary goal—but more than one-third of the respondents in January’s survey said that they would have to take on additional debt in order to pay a $1,000 emergency expense.
Respondents in the January survey were aware of the potential impact of a costly emergency expense, as 30 percent of them said that they or an immediate family member has had a major unexpected expense within the last 12 months with a median reported price tag of $3,750.
Curiously, young baby boomers aged 55 to 64 were the most likely to report being able to pay for an unexpected expense from their savings, while older baby boomers aged 65 to 73 were the most likely to finance their emergency expense via a credit card.
Both surveys were conducted online using samples from Ipsos’ Omnibus database.