Consumers are increasingly stressed about their finances despite having more tools than ever to manage their money.
Historical family debtInflation and general economic uncertainty are making consumers more concerned about their spending habits. Money is the number one stressor for Americans, with 90% of adults who indicate that their finances affect their daily stress levels.
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TD Bank recently published its annual report Consumer Spending Index 2024reflecting growing consumer concern about their financial health.
TheStreet met with Chris FredDirector of U.S. Credit Cards and Unsecured Lending at TD, to analyze the data and identify what consumers can do to take control of their financial well-being.
Consumers are concerned about their finances but confident in their ability to manage them
TD's findings highlight an interesting contradiction: 67% of consumers feel that some aspect of their finances keeps them up at night, but 85% are confident in their ability to manage their finances.
Fred explains: “It’s certainly a paradox how people can feel confident in their ability to manage their finances and yet have all these stressors keeping them up at night.”
“Today, consumers are much more in tune with their finances than ever before. They’re smarter, more educated, and more tool-driven, but things are tough right now,” Fred continued. “There’s inflation, high interest rates, student loans, retirement savings, and everyday living. There’s a lot to consider, and I think it’s exhausting trying to think of all the different ways to manage it.”
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“You have to put some thought and time into analyzing your expenses,” she said. “So, in the end, people feel like they can figure out a way to make it work. But it’s still exhausting and they’re worried about questions like, ‘How am I going to pay the bills? Should I put this off and pay this first?’”
Current levels of inflation and debt have led consumers to change their spending habits. Fifty percent of respondents say food prices have increased more than all other expenses over the past year, and 42% say they need to change their financial priorities.
Fred recommends that consumers actively monitor their cash flow to prevent expenses from snowballing.
“I think there are different variables at play when it comes to managing your spending in the context of your income and cash flow, but knowledge is power,” she says. “When you’re better armed with information about how you spend and where your money goes, you can start to adjust your strategies more effectively,” she explains. “Whether it’s streaming services, coffee, lunch, or daily expenses, it all adds up at the end of the month.”
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Tips for managing your finances during high inflation
Despite the availability of tools to help monitor and track spending, consumers are finding it increasingly difficult to manage competing financial obligations. Only half of respondents are actively saving for retirement, and one in five say outstanding credit card debt is preventing them from achieving their financial goals.
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Fred stresses that if you carry a balance of debt month to month, you should actively shop around for the best rates. “Most people have debt, and you know debt is expensive,” he said.
“If you have a high credit score, shopping around for a better rate could offer huge savings. Likewise, if you are paying interest rates on multiple cards, paying off the card with the highest interest rate first will allow your money to go a little further than it normally would,” she added.
Fred shares some tips for coping with the tough economic conditions facing consumers today. He points out that one of the best financial tips is the simplest: small changes can add up over time.
“I believe the secret to good financial health is in the details; the things we don’t often see are the ones that probably matter the most,” he explains. “A few dollars saved here and there over time can add up. The power of time should never be underestimated.”
“It may require a little sacrifice in the short term, but there are 365 days in a year. Those daily routines do matter, and they start to add up. That can impact how things look five, ten, or even fifteen years from now.”
While inflation can be intimidating, small cuts can help reduce spending and stretch your paycheck further. Tracking expenses also increases awareness of spending behavior and can act as a barometer of financial health.
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