Most of us expect our finances to improve over time, as we advance in our careers and our incomes rise.
But heading deeper into 2019, 55 percent of Americans don’t expect their financial situation to improve, according to Bankrate’s most recent Financial Outlook Survey.
This number includes 12 percent who think their situation will be worse, and 44 percent who think it will stay the same. Older respondents were more pessimistic compared to millennials, as were women compared to men.
When asked why, 49 percent blamed current political leaders in Washington.
Other reasons included the higher cost of living (38 percent), and increased debt burden (37 percent).
In a separate survey conducted in January, only 40 percent of respondents reported that they would be able to meet a $1,000 financial emergency by accessing their own savings, with 30 percent having experienced just such an emergency in the past year of up to $5,000.
Both surveys were conducted using representative samples of the U.S. population.
The results aren’t surprising, given the financial fallout from the recent government shutdown and media speculation over its effects on an already slowing economy.
However, Americans have been pessimistic about the overall economy and have held the government responsible for their personal financial struggles for far longer.
A 2013 poll by the National Journal reported that 62 percent of Americans held the federal government responsible a negative influence on their individual financial situations.
Reasons cited included fewer opportunities for changing jobs or for raises in a current job, higher interest rates, and more difficulty obtaining a personal loan.
Why do these beliefs matter?
Such perceptions can be self-fulfilling, especially when they affect the choices people see as available to them and the financial decisions made as a result.
Regardless of how rational these beliefs may be, they can influence how much money people choose to save or spend, or whether it’s worth pursuing a salary increase or better-paying job.
In turn, these individual actions can collectively affect the larger economic picture—beliefs work both ways.
It’s important to encourage plan participants to take steps to control what they realistically can—such as opening an emergency fund. Yet it’s equally important for advisors to acknowledge that there are external factors beyond the participant’s control; factors that can have a negative impact on an individual’s situation.
For example, there is a real gender wage gap that affects women of color, which over the long term severely affects their ability to save adequately for retirement.
The current financial system has shifted more risk to the individual, as the 401k shows. Placing the onus for financial health solely on plan participants, without noting how the larger economic picture, may limit their ability to reach a state of financial well-being, while contributing to misconceptions about low-income workers and the perception that financial advice is only for the well-to-do.
Dr. Martha Brown Menard is the Senior Researcher and data diva for Questis. She is a research scientist, financial wellness coach, and member of the Association for Financial Counseling and Planning Education. She is passionate about democratizing personalized financial guidance through scalable and configurable technology.