KeyBank, a Cleveland-based bank and financial services company with branches throughout southeast Michigan, released its 2023 Financial Mobility Survey, showing American are in increasingly difficult financial positions as 55 percent faced financial challenges during the last year, up from 37 percent from the 2022 survey.
“After the rollercoaster of the last three years, Americans are much more aware of the financial challenges they face and are seeking ways to manage their lives better,” says Mitch Kime, executive vice president of consumer client growth at KeyBank.
“More people have experienced a loss of income, fewer feel financially savvy, and burnout is rising among younger respondents. Given the current economic climate, it’s no surprise that Americans want to take control of their finances.”
The survey polled more than 1,000 Americans on their financial, life, and work-related priorities after a year of market volatility and uncertainty, revealing the steps they have taken to become more financially mobile.
Two in five people (42 percent) reported feeling overwhelmed or burned out regularly, with Millennials or younger (52 percent) and those under 35 (54 percent) experiencing burnout more acutely. To cope with this feeling, 39 percent of Americans are spending less and budgeting more, followed closely by 25 percent of those who spend more frequently on everyday items.
Compared to last year, a good night’s sleep is no longer sufficient when it comes to feeling financially resilient. The top three things that will make consumers feel more financially resilient in 2023 are financial information, up to 55 percent from 48 percent; digital banking tools, up to 47 percent from 39 percent; and advice from a financial advisor, up to 36 percent from 29 percent year-over-year — all edging out a good night’s sleep, down to 30 percent from 43 percent.
A third of consumers are protecting themselves from making financial faux pas by better identifying and prioritizing needs versus wants, but with plans to spend more money on experiences or events, what constitutes a must-have versus a nice-to-have may be changing.
“The last several years have taken a toll on individuals, impacting their financial and mental well-being,” says Jamie Warder, head of digital banking at KeyBank. “With the uptick in income decline and consistency of financial faux pas has made many consumers feel less savvy about their finances this year compared to last. Yet, despite all this, Americans find themselves much more mindful about money going into 2023.”
Burnout can impede not only job performance but overall financial health as well. Resolving this feeling often requires drastic changes to achieve work-life balance, but one in four Americans (25 percent) decided to pull out their wallets instead, spending more frequently on everyday items.
Despite feeling stressed and overworked, more than half (62 percent) still believe that work-life balance is more important than a high-paying salary and continue to value spending time with family and friends and growing finances most. What’s more, of those feeling overwhelmed or burned out, 39 percent took action by spending less and budgeting more.
Those who are Millennials or younger, on the other hand, decided to significantly adjust their lifestyles and prioritize higher-paying salaries, spending more time on things they enjoy and being transparent about their financial struggles. In fact, these respondents are much more likely to discuss their financial challenges openly with their partners (59 percent) compared to Gen X and Boomer counterparts (43 percent).
While each generation faced notable financial challenges this year, Millennials or younger have continued spending big and saving little. They are less likely than their older counterparts to curb spending on discretionary items in the new year, dropping 24 points to 50 percent.
More than three-quarters (78 percent) of Millennials or younger made big purchases last year, and 78 percent anticipate making big purchases next year. However, only 57 percent of Millennials or younger can come up with $2,000 right away, compared to 70 percent of Gen X and Boomers.
Given the financial challenges consumers faced, many opted to reframe 2022 into a year of learning, creating a foundation to boost confidence and inspire financial mobility in the future. Looking at 2023, Americans want the one-two punch of data and insights.
Almost half (47 percent) say digital banking tools make them feel more financially resilient, with 72 percent comfortable with online banking and 65 percent comfortable with mobile banking apps.
Americans continue to show a desire for digital approaches when it comes to financial support, highlighting the importance for banks to meet the technology and experience needs of their clients. In fact, 46 percent of consumers who consider themselves financial experts rely more on digital tools now than in 2021.
“Each year, we’ve seen Americans increasingly lean in to digital and online banking tools to help them feel more financially resilient during challenging times,” says Warder. “Not only are consumers comfortable with online banking, but we’ve also seen a 25 percent increase in those who use digital banking tools from last year. As we work to meet our customers’ financial needs, we will continue to invest in and expand our digital offerings, bettering the customer experience and satisfaction.”
The share of consumers making financial faux pas has remained consistent over the year, but unlike in the past, these mishaps result in lower confidence. Americans previously agreed that their biggest financial faux pas have impacted savings goals.
However, more than double the number of respondents — 89 percent this year compared to 35 percent last year — said their biggest financial faux pas involved budgeting issues. To help protect themselves from making a financial faux pas, one in three consumers are better identifying and prioritizing needs versus wants.
“Needs and wants have always been fluid among consumers, but this year we’ve seen a true change in how people approach their purchases,” says Kime. “As we enter 2023, the standard of needs will continue to evolve and elevate.
“As burnout prevails among consumers, things that were once seen as a desire, such as a vacation, will now be considered a necessary expense to Americans. As Americans evaluate mental health and well-being in this new normal, we will continue to see what constitutes a ‘need’ shifting in the year ahead.”
Most consumers are still planning on making big-ticket purchases this year, with two-thirds intending to make at least one large purchase in the next year. Consumers focused their spending on items such as clothes, technology, and vacations this year, with vacations ranking in the top spot. Looking ahead, people expect costs to rise. Forty percent of those considering a big purchase next year expect to spend more than they would have had to this year.
This survey was conducted online by Schmidt Market Research. 1,018 Americans, ages 18-70, with sole or shared responsibility for household financial decisions, who own a checking or savings account, completed the survey between Sept. 8 and Sept. 16, 2022. The survey asked respondents about their financial attitudes, understanding, awareness, and actions over the prior year.
