Households Face Financial Pressures but Remain Hopeful

Tue, 09 April 2024  |  consumers economy 

There's a notable uptick in Americans' optimism regarding their financial futures, as highlighted in the latest Consumer Spending & Saving Index from MassMutual. This quarterly index sheds light on consumer financial practices, beliefs, and expectations amid the prevailing circumstances.

"It's encouraging to see the resilience of both the American people and economy as we emerge from a year marked by uncertainty, continued inflation, high interest rates, and shifting geopolitical dynamics," remarked Paul LaPiana, the head of MassMutual's brand, product, and affiliated distribution. "Adhering to sound financial practices daily, like saving diligently, reducing indebtedness, and diversifying investment portfolios, lays a solid foundation for a secure financial future."

Key findings from the survey include:

RENEWED FINANCIAL OPTIMISM: Compared to last quarter, a higher percentage of Americans are optimistic about their financial situation (25% this quarter vs. 19% previously), despite widespread notice of rising grocery prices (91%).

• There's a noticeable increase in optimism among Baby Boomers (27% in Q1 2024 vs. 16% in Q4 2023) and the Silent Generation (34% in Q1 2024 vs. 16% in Q4 2023), whereas Gen Z reports financial stress (43% in Q1 2024 vs. 31% in Q4 2023).
• A significant drop in the number of Americans expecting a recession compared to last year (37% in Q1 2024 vs. 52% in Q1 2023).
  35% state that their financial concerns will not influence their voting in the upcoming presidential election.

PARENTS: A large majority of non-retired parents are contributing to retirement plans, with fewer opting for 529 plans for their children's college savings.

• 80% of non-retired parents contribute to a retirement plan, with 63% contributing at least the employer-matched minimum.
• Only 28% of parents are saving for their child’s college expenses through a 529 plan.

MOTHERS VS. FATHERS: Mothers managing family finances often sacrifice their own needs and feel less appreciated for their financial management efforts.

• 56% of mothers typically defer personal care to prioritize family finances, as opposed to 31% of fathers.
• Only 42% of mothers involved in financial management feel "very appreciated," compared to 54% of fathers.
• 42% of mothers, compared to 31% of fathers, postpone personal activities to create memorable summer experiences for their children.

LESS SUMMER FUN EXPECTED: Rising costs are affecting family summer plans, with a significant number of parents sacrificing their own leisure to afford activities for their children.

• 45% of parents with school-age children are revising travel plans due to financial concerns, half of whom are canceling trips altogether (50%).
• 20% of parents with school-aged children contribute to a dependent care flexible spending account, which could offer tax-free savings for summer activities.

THE SUBSCRIPTION ECONOMY: Younger individuals find it more difficult to keep track of subscription expenses than older age groups.

• 71% of Americans have a rough idea of their monthly subscription costs, but only 40% know exactly what those subscriptions are. Nearly half of Gen Xers and Baby Boomers are fully aware of their subscription expenses, in contrast to 19% of Gen Z and 37% of Millennials.
• 20% of Americans with recurring subscriptions spend on services they seldom use (18%), a trend most pronounced among the younger demographics, with Gen Z (26%) and Millennials (27%) at the forefront (compared to 16% Gen X, 9% Baby Boomers).