Alongside eased pandemic restrictions, consumers report rise in excessive spending and other financial behaviors that worsen financial progress in latest BMO Real Financial Progress Index
CHICAGO, Sept. 8, 2021 /PRNewswire/ - As the U.S. continues to make its way through the pandemic, a majority (51%) of Americans believe they are making real financial progress. However, trends from BMO's Real Financial Progress Index, a quarterly measurement of consumer sentiment about money, point to increases in consumer confidence potentially leading to negative behaviors that could undo consumers' financial progress. These findings are from the latest BMO Real Financial Progress Index, conducted by Ipsos. The national survey sampled adults aged 18+ in the U.S. from July 13 to Aug. 2.
Overall, the survey data showed American adults are experiencing steady increases in confidence about their current financial situation, which is driving an optimistic outlook for many:
4 in 5 (80%) of respondents are positive about their current financial position.
Chicago area residents in particular report increased confidence levels – 81% up from 73% in April.
Half of US adults (50%) see themselves as more financially secure than last year, consistent with findings in January and April.
Most Americans report they know what they need to do to improve their finances (82%) and feel they have enough savings to get through an unexpected emergency (72%).
However, this increase in confidence and optimism is also correlated to a general decline in good financial decision making and negative spending behaviors. The survey revealed slippage on a number of important financial dimensions:
Financial Planning: While nearly three in four Americans (72%) still set financial goals, financial planning has hit a plateau. The most significant drop occurred among Gen Z (ages 18-24,) with those setting financial goals declining from 80% to 74% from January to now.
Excessive Spending: Additionally, the survey revealed increases in excessive spending and activities that can worsen one's financial situation up five points nationally to 50% since April, with the largest jump being from those in the 35-44 age group, which is up from 59% to 69%.
Impulse Spending: Since April 2021, there has been an uptick in many Americans saying they do things that "worsen their financial situation" (e.g. impulse purchases, carrying more consumer debt, overspending, etc.). These negative financial behaviors rose across many age cohorts with those ages 25-35 up to 63% from 53%; ages 35-44 jumped to 62% from 55%; and ages 55-64 up from 21% to 30%.
"While it's encouraging that many Americans are feeling confident they're accomplishing real financial progress, we want to ensure their progress is sustainable through the economic recovery," said Paul Dilda, head of consumer strategy for BMO Harris Bank. "Consumers should continue to focus on the long term while the economy is good to continue the progress many made last year. They can work with their bank or other trusted financial advisor to ensure they don't unintentionally slow their financial momentum."
BMO offers the following tips to maintain meaningful financial progress:
Talk about money with trusted individuals – friends, family, or a professional banker or financial advisor.
Consistently set or reevaluate financial goals when either your individual financial situation or broader economic conditions change.
Take advantage of programs and educational resources. A banker can suggest programs and tools that are not well known based on an individual's unique goals and financial situation.
BMO holds regular Real Financial Progress Checks with customers to understand their goals and help customers achieve them over time. The bank also offers a wide range of personal banking products and solutions to help customers make real financial progress toward their goals, whether building an emergency fund, making a major purchase, saving for a vacation, or putting money away for retirement.
About the BMO Real Financial Progress Index Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money.
The research detailed in this document was conducted by Ipsos in the U.S. from July 13 to Aug 2, 2021. A sample of n=2,338 adults ages 18+ in the U.S. were collected this wave. Quotas and weighting were used to ensure the sample's composition reflects that of the U.S. population according to census parameters.
For more information on how BMO's products and services can help consumers make real financial progress, visit www.BMOHarris.com.
About BMO Harris Bank BMO Harris Bank provides a broad range of personal banking products and solutions through more than 500 branches and fee-free access to over 40,000 ATMs across the United States. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the United States. For more information about BMO Harris Bank, visit the company fact sheet. Accounts are subject to approval. BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a highly diversified financial services provider with total assets of CDN$971 billion as of July 31, 2021.