As inflation continues to drain resources from household budgets already stretched from the pandemic, many Americans are more worried about making ends meet compared to 12 months ago. A new survey from the National Foundation for Credit Counseling® (NFCC®) and Wells Fargo, conducted online by Harris Poll in November of 2021, reveals that most Americans (62% or approximately 3 out of 5) have financial worries and a little over a quarter of the general population are more worried about meeting basic household expenses compared to 12 months ago (26%). Military spouses are more likely than the general population, active duty servicemembers or veterans to share that they are more worried (44% vs 26%, 30%, and 17%, respectively). Similar expressions of worry are also connected to debt management and the ability to meet savings goals.
“Consumer resilience was pushed to the limits during the pandemic and is once again being tested as American families grapple with the pressures of inflation,” said NFCC President and CEO Rebecca Steele. “Despite new challenges, our mission remains the same as we focus our resources on helping worried consumers overcome debt difficulties while ensuring that everyone has access to nonprofit financial counseling.”
Supporting the ability to manage debt and avoid financial setbacks is a primary reason for maintaining a household budget. Except for military spouses, all other surveyed populations saw an annual directional increase in the number that do not have a budget. Among the general population, 56% do not have a budget in 2021 as compared to 53% during the prior year. Regarding spending, about half of active duty service members and their spouses say they are spending more than last year (53% & 55%) due to the current economic climate. Nearly a third of the general population and even fewer veterans admit they are spending more than in 2020 (30% & 28%).
Credit Card Debt
Consumer debt activity is key indicator of financial well-being, especially during times when the cost of living is increasing at a rate that outpaces income growth. Credit cards are among the types of debt often considered costlier than other options, yet most general population households (64%) report having used credit cards, and more than a third (38%) report carrying balances for more than a month. Carrying balances adds to the cost of repayment over time when interest accrues.
“The new survey affirms a reliance on credit cards, with most households carrying the same or more credit card debt compared to 12 months ago,” said Bonnie Wallace, head of financial health philanthropy for Wells Fargo. “Repaying debt can feel very feel overwhelming, which is why making a plan to manage your payments and balances can help. It is important for people to know they are not alone, and there are qualified financial counselors who can help them reduce debt, save for retirement, or reach other financial goals.
Dealing With Financial Emergencies
When needing $2,000 for an emergency expense, it is reassuring that most Americans would turn first toward their savings account (53%). Even so, the second most popular response was to use a credit card as a primary resource for those emergency funds (28%). Active duty military and their spouses are also more likely than the general population or veterans to report other sources to cover a $2,000 emergency, such as borrowing from a retirement account or seeking part-time income.
Preparedness is the key to confidently resolving financial challenges, and when financial capacity is not sufficient for overcoming a setback, it helps to know where to turn for guidance. For that, we can all take a note from the survey results showing that members of the military and their spouses have a higher awareness of nonprofit credit counseling as a source for help. Both military and civilian consumers can get the help they need to overcome debt challenges by visiting www.nfcc.org or calling 800-388-2227.
The complete survey and a summary of key findings are available at https://www.nfcc.org/clientimpact/ on the NFCC website.
About the 2021 Consumer Financial Literacy and Preparedness Survey
The 2021 Financial Literacy and Preparedness Survey was conducted online within the United States by The Harris Poll on behalf of NFCC and Wells Fargo from November 1 to November 15, 2021 among 2,000 U.S. adults ages 18 and older representative of the U.S. general population and 500 U.S. adults ages 18 and older who are currently active, enlisted members of the U.S. military, excluding reserve members and those in the National Guard (i.e., “servicemembers”), 250 U.S. adults ages 18 and older who are spouses/partners of servicemembers, and 500 U.S. military veterans. For the complete survey method, including weighting variables and subgroup sample sizes, please contact Bruce McClary.
Founded in 1951, the National Foundation for Credit Counseling® (NFCC®) is the nation’s first and largest nonprofit dedicated to improving people’s financial well-being. With nearly 600 member offices serving 50 states and Puerto Rico, our NFCC Certified Credit Counselors are financial advocates, empowering millions of consumers to take charge of their finances through one-on-one financial reviews that address credit card debt, student loans, housing decisions and overall money management. Make one of the best financial decisions of your life. For expert guidance and advice, call (800) 388-2227 or visit www.nfcc.org today.Learn more