Yahoo Movies Overwhelming Majority Fear Imminent Recession — How Americans Are Proactively Protecting Their Finances
With inflation at a four-decade high, a whopping 84% of Americans say they fear a recession is looming this year, according to a new survey. This sentiment is largely driven by higher grocery bills and the rising cost of gas. In response, many consumers say they don’t feel confident about their financial situation compared to last quarter, a reality which is pushing them to make lifestyle changes.
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The BMO Real Financial Progress Index, released Sept. 28, found that 76% of Americans are not waiting for a potential recession to proactively protect their finances.
These changes translate into 34% of those polled delaying major purchases, such as buying a new home or car. In addition, 29% say they are paying down debt, 28% are planning to cut back on holiday spending, 24% are allocating more income to savings and 14% are staying in a job they don’t enjoy.
“What stands out from BMO’s latest Real Financial Progress Index is the fact that 76% of Americans are making lifestyle changes due to recession concerns, and to that point, 34% are delaying major purchases like a new home or car,” Paul Dilda, Head of U.S. Consumer Strategy for BMO Financial Group, said. He added that this finding, specifically, highlights the importance of why people should be talking with their banker or financial advisor who can take a holistic view of a situation — and who offer concrete steps on how to make real financial progress even through inflationary cycles.
Dilda suggested it’s always a good idea to have a solid financial plan, especially during any potential economic downturn or inflationary cycle.
The No. 1 piece of advice Dilda offered? Talk with your banker, who can help you review and adjust your budget to account for rising costs so you can continue to save and make real financial progress.
“It’s crucial to know what you have coming in, what you spend day-to-day and month-to-month, and adjust accordingly based on your goals,” he said. “And for those needing to borrow to pursue goals, keep in mind — that, too, has become more expensive due to higher interest rates. So right now, it may make sense to postpone those big-ticket purchases, especially for individuals who plan to borrow. Review your monthly payments and rates, such as insurance bills and subscriptions, to ensure you are getting the most for your money.”
Older Americans More Concerned About Inflation Than Those Younger
The survey also noted that older Americans say they feel more concerned. Indeed, 82% of the 55-to-64 age group polled say their concerns about inflation have increased over the last three months, compared to 62% of those between the ages of 18-24 and 70% of those aged 25-34.
“There’s a lot of debate over whether or not we’re in a recession, but for the average person, ‘recession’ tends to mean an elevated threat of job loss or under-employment and difficulty finding another job,” Chris Motola, MerchantMaverick.com analyst, said. “What you’re seeing in the report is people reducing liabilities or refusing to take on new liabilities in the short term, which will help savings go farther should they lose their jobs. As for what else they can do? Having some additional revenue streams can help build up savings and leave you in better shape should your primary source of income be taken away.
Another key finding of the BMO report: Financial confidence has been decreasing in the past few months, with the percentage of Americans polled who feel less financially secure increasing to 27% from 16% versus the same quarter a year ago.
In addition, the number of Americans who say they are making financial progress decreased to 54% from 62% a year ago, while more than 40% of Americans under 35 say they don’t have enough savings to cover an emergency.
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BMO recommended some additional steps for financial progress, including:
Using digital banking tools and apps to help track spending patterns and save.
Developing a savings and retirement plan with your banker (or financial advisor) who can help create structured long-term financial goals and assist in keeping you on track.
Reviewing monthly payments, such as insurance bills and monthly subscriptions to ensure you are getting the most out of your money.
Speaking with an expert to help ensure your savings and spending goals are still on track to reach financial goals, such as buying a house or car.
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This article originally appeared on GOBankingRates.com: Overwhelming Majority Fear Imminent Recession — How Americans Are Proactively Protecting Their Finances
