From Millennials to Boomers, consumers feel good about their prospects.
Each week, Consolidated Credit searches for unreported financial research that can help you deal with your debt and budget. This week…
The interesting study
Wells Fargo has put out an extensive breakdown of consumer sentiment about their financial prospects in the New Year. The survey polled consumers from a wide range of ages and financial backgrounds to see how consumers feel about their financial outlook in 2015. It finds that the majority of consumers are optimistic about the next twelve months.
The big result
Three out of four (78%) of consumers feel the economy will remain stable or improve, while four out of five (81%) believe their own personal financial situation will remain stable or improve.
Here is how many consumers believe in that kind of stability and growth by generation:
- 79% of millennials are confident in the economy, while 84% are confident in their personal outlook
- 75% of Gen Xers have economic confidence, while 81% have personal confidence
- For Boomers, it’s 70% for the economy and 78% for their personal outlook
The fascinating details
Here are some additional findings that show just how confident the consumers are about 2015:
- 71% of consumers believe they will be homeowners within the next 5 years
- Roughly one in three consumers is doing more than just hoping for financial success – they’re actively looking to improve their financial literacy through education.
- 38% of consumers have less debt now than they did 2 years ago
- 38% also say they have savings to support themselves for a few months if they lost their jobs
- 27% feel prepared for unexpected expenses and emergencies
- 81% are planning ahead for major expenses over the next few years
What you can do
Optimism is great, but you need to be taking steps to support that kind of positivity. That’s why it’s encouraging to see consumers taking steps to build their financial understanding and build a solid outlook because this makes it easier to avoid problems when roadblocks come along.
Here is what you can do to help ensure stability and growth in 2015:
- Build your own financial safety net. This includes establishing both short-term and mid-term savings. Short-term savings is money you have on hand in case of emergencies or unexpected expenses; at minimum you should have $1,000 in short-term savings. Mid-term savings is what you have in case of unemployment or other issues that reduce or inhibit your ability to earn income; you should have 3-6 months of budgeted expenses set aside, at minimum.
- Make a 5-year financial plan. Setting goals is the key to building a better financial outlook. Talk together as a household and plan for what you want to achieve over the next few years. This will help you turn your goals into reality, so if you want to buy a home you have time to build your credit and savings to make it easier to qualify for the mortgage.
- Only take on debt that you have a plan to pay back. Keeping debt minimized is essential to avoiding the financial traps that many consumers have fallen into over the past few years. But even as the economy improves and continues to grow, large amounts of debt hanging over your head is never a good thing. Only take on debt you know you can pay back and keep things like credit card debt minimized.