Inflation and rising costs are the reason 33% of Americans say they are struggling to make ends meet or are struggling financially, according to Lincoln Financial Group’s latest Consumer Sentiment Tracker.
Survey respondents also said they did not expect much relief from these economic difficulties, with 76% saying they expect inflation, market volatility and debt to worsen this year.
However, 88% of respondents said they see room for improvement in their finances and 45% said they believe their financial situation will improve this year. Additionally, 53% said they planned to set financial goals for themselves this year despite the dire outlook for the US economy.
“It’s important to be honest with yourself about where you stand financially and what your goals are,” Ed Walters, senior vice president of Lincoln Financial Group’s Lincoln Financial Network wealth management practice, said in a statement. “With a little discipline, knowledge and guidance, you can have a strong financial year and see long-lasting results.”
If you’re struggling to pay off debt, you could consider using a personal loan to consolidate your payments at a lower interest rate, saving you money each month. You can visit Credible to find your personalized interest rate without affecting your credit score.
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Inflation is easing, but recession remains a concern
Inflation rose 0.5% in January to register an increase of 6.4% – the smallest 12-month increase since October 2021.
Back-to-back months of improving inflation have led many to believe it may have peaked, but continued high prices mean it is likely to take longer before inflation reaches the Federal Reserve’s 2% interest rate target.
That means consumers will likely see borrowing costs continue to rise as the Fed maintains its tight monetary policy and continues to raise interest rates this year to meet its target.
The Fed has started to ease interest rate hikes and raised rates by 25 basis points at its last meeting. It was preceded by a 50 basis point interest rate hike in December.
“This latest CPI print is held higher by the housing data component of its calculation,” said Adam Taggart, CEO and founder of Wealthion. “This housing data is lagging, reflecting housing conditions 12 months ago, much more so than today, which are softening rapidly.
“Regardless, the Fed will use this stale data to justify a further increase in the federal funds rate to reduce inflation toward its 2% CPI target,” Taggart continued. “This may indeed lead to ‘hyper-tightening’ by the Fed, ultimately creating a deeper, longer and more painful recession than necessary. But it’s unlikely he will.”
If you’re looking for ways to lower your monthly expenses, paying off debt could be a good place to start. A personal loan could help you consolidate your monthly payments and pay off debt at a lower interest rate. Contact Credible to speak with a loan specialist to see if this is the right option for you.
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Goal setting helps improve financial wellness
Although most respondents said they expected inflation, market volatility and debt to worsen this year, 53% said they planned to set financial goals. Survey respondents who set financial goals in 2022 were two to three times more likely to say their personal finances had improved, the survey found.
“The Lincoln research underscores the importance of taking a definitive approach,” Walters said. “While financial goals don’t need to be complicated, you should be able to easily monitor and track your progress. Consumers’ wallets are stretched with many competing financial priorities, so now is a good time to get back to the basics.”
Here are two changes you can incorporate to boost your financial wellness in 2023:
Budget tracking and spending
Tracking how you spend your money is one way consumers can highlight areas where they can afford to make more economical choices. Lincoln Financial advised consumers to keep it simple and start with fixed costs like mortgages, car payments and savings. Then add more flexible expenses like groceries and entertainment.
“Instead of setting a fixed amount, consumers should combine flexible spending and adjust how they allocate money on a monthly basis to address needs and plans for that month,” the group said.
Focus on building your savings
Consumers should try to boost their savings. One way to reach that money goal is by looking at your budget, Lincoln Financial said.
“Cutting a little here and there can reveal extra money to put aside,” the team said. “These funds can be placed in an emergency account, retirement plan or employer-sponsored college fund, or used to prioritize investments.”
If you have accumulated debt, you could consider using a personal loan to help pay it off at a lower interest rate. Visit Credible to find your personalized interest rate without affecting your credit score.
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