The past year has presented countless challenges, and for many, a reassessment of goals — especially when it comes to finances. A new survey shows attitude shifts including a renewed effort to gain control of finances, especially through increased saving and getting professional advice.
Even Americans who did not lose work lost a sense of confidence in the economy. The survey by Harris Poll for Empower Retirement and Personal Capital reveals a change in attitudes about finances from April — as the pandemic’s effects were beginning — to December of 2020. Despite the stock market rallying after the initial lockdowns, only 22% of survey respondents from December said they felt optimistic about their finances, as compared with 29% from the April survey.
With the turmoil of the last year, 2/3 of respondents said they were bracing for financial pain in the event of future lockdowns, with 44% concerned about losing money on investments. Reacting to uncontrollable world events, one theme emerged: People want to feel more in control of their own finances, whatever comes next.
These tips can help you feel more confident financially, no matter your circumstances.
1. Save what you can
There’s no better buffer against unexpected emergencies — anything from car breakdowns to job loss — than an emergency fund. Financial professionals recommend saving at least three to six months of expenses to be prepared for emergencies.
Sound daunting? Start small, and consider setting up automatic deposits into a savings account with each paycheck, to save without thinking about it. Even a few dollars per pay period can add up over time.
2. Invest in your family’s future
According to the survey, parents are concerned about the pandemic’s impact on their children’s education, but many believe the crisis will lead to a fundamental shift in higher education. Nearly 6 out of 10 (59%) expect student loan debt forgiveness to become more common, and half believe the pandemic will make higher education more accessible in the long term.
If your children are college bound, have a conversation with a financial professional or your child’s high school guidance counselor about how financial aid works and what strategies may benefit your family. If you have young children, look into a 529 college savings plan in your state, which can provide both tax and financial benefits.
3. Retirement is paramount
Whether you’re approaching retirement age soon or it’s years away, consider taking full advantage of your employer’s matching funds for your 401(k) contributions. Ask your HR department about how to fully utilize all your available employer retirement benefits, and increase your retirement savings percentage now if you can. Your future self will thank you.
4. Consider your HSA account as part of your retirement strategy
If your company offers a health savings account (HSA), remember that any unused funds can be saved up to be used during your retirement — adding to your future financial stability. When you do need your HSA for medical expenses, check with your employer to see how it can best be used. An HSA can help pay for qualified medical expenses including prescriptions, medical tests and treatments, including many vision and dental expenses.
5. Consult a professional
Given the turmoil of 2020, Americans are focusing on fundamentals: cutting spending, increasing savings and safeguarding investments. Over half the survey respondents sought financial guidance related to the election. As uncertainly continues, an increasing number are seeking professional help to make financial decisions and plans.
“A good financial professional can provide not just advice on saving and investing, but financial wellness recommendations on everything from building a budget and starting an emergency fund to managing debt,” said Edmund Murphy, president and CEO of Empower Retirement.
A financial professional can help you set priorities and find the best vehicles for protecting and growing your money. Ask your employer if your retirement plan provider offers financial advice through virtual sessions or phone calls with a professional. You may also be able to access digital tools that help you calculate how close you are to your retirement goals, along with ways to monitor your investments.
For more tips about financial planning, visit Empower-retirement.com/empower-insights.