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Daily Capital

Monitoring Your Financial Vitals

Key Takeaways

  • While investments were the most frequently monitored financial category with 20.6% of respondents checking theirs daily, 14.7% of respondents admitted to neglecting their investments entirely.
  • While Millennials showed a lower net worth than Generation X and Baby Boomers (suggesting debt), they maintained a commitment to retirement savings, with 60% of their net worth being retirement savings.
  • Groceries were reported as the number one expense overall and for each age group.
  • 73.7% of respondents reported following a generally ranged budget, while 21.4% of respondents reported following a budget precisely to the dollar.

 

The topic of personal financial security has been at the forefront of American discourse lately, as COVID-19 restrictions lift and money habits begin to shift. Just how tapped into their own financial situation is the average person? How are they putting money aside for a rainy day? How much are they saving? And where are they putting it?

We surveyed 1,007 people with a full-time job and an annual income of over $20,000 to find out how well they are acquainted with their own finances. Read on to find out how respondents of all generations are budgeting, spending, saving, and investing in a new technological age.

What Is Your Financial Pulse?

  1. Monthly Budget: The amount of money you plan to spend or save on a monthly basis
  2. Debt: Borrowed money that needs to be paid back
  3. Emergency Fund: Money stashed away that you can use in times of financial distress
  4. Investment: Assets or items acquired with the goal of generating income or appreciation
  5. Retirement Savings: Money set aside to be spent during retirement
  6. Credit Score: Number between 300-850 that depicts a consumer’s creditworthiness (The higher the score, the better a borrower looks to potential lenders.)
  7. Net Worth: Assets minus liabilities; everything you own minus all that you owe

Anyone with a smartphone and a signal can check their account balance at the drop of a hat these days. But how in tune is the average person to the fluctuations of their financial investments and the strengths and weaknesses of their portfolio? The answer is more complicated than one might think.

Respondents reported a variety of habits when it came to measuring how often they monitored different aspects of their key financial vitals. More than 90% of respondents reported checking their monthly budget, debt, emergency fund, or credit score at least once a year. While investments were the most likely category to be monitored daily with 20.6% of respondents doing so, it was also the second most likely to be neglected completely – 14.7% of respondents claimed never to check their investments.

Nearly 85% of respondents that self-reported good financial health – and over 89% of respondents that self-reported bad financial health – reported checking their monthly budget at least once a month. The second most likely vital to be checked for each group, respectively, was the emergency fund at 84.3% among “good health” respondents and debt at 85.9% among respondents who reported poor financial health. Both groups reported checking net worth the least.

Respondents to our survey had their reasons for checking or not checking in on their own financial health. 57.2% of respondents reported that monitoring their financial vitals led to reduced financial stress. Conversely, 21.4% responded that checking their finances added stress, while the remaining 21.5% did not feel strongly either way. Only 45.7% of respondents could estimate their monthly budget to within $100. Respondents 50 and over were both the age group with the highest net worth and the most likely age group to be able to accurately estimate that net worth.

The Money Trail

Tracking spending by age group can help illuminate just what priorities are most important when it comes to finances at different stages in life. Our respondents reported interesting differences in terms of where their money goes and how much is left over for savings.

The top spending age group among our respondents was the 50+ group with 73.2% of income spent each month, compared to ages 20 to 29, who reported spending 65.8% of their income monthly. One thing our respondents agreed on no matter their age was that groceries were their number one expense. This could be due in part to a sharp rise in grocery prices in 2020.

The 30 to 39 group differed the most from the crowd. They were the only age group to have debt obligations land in the top two for spending and also the only group to have child-related expenses land in the top four. Respondents that reported spending less than 60% of their income were the most likely to have money left over at the end of the month. However, 19.8% of respondents reported rarely or never having any money left over at all.

When to Save and How Much

Saving for retirement isn’t just a concept for middle-aged consumers. On average, even our younger survey respondents reported having significant savings.

Median retirement savings peaked among those in their 60s, where the median savings reported was $593,906; way up from a median of $24,129 among those in their 20s. People in their 60s also reported the highest average savings, median net worth, and average net worth. This is particularly good timing, as the average male and female retirement ages are 65 and 63, respectively. People under 40, despite having the lowest numbers for net worth, still contributed a significant amount to savings.

Keeping an Eye on Spending

Advances in point-of-sale technology and new access to on-demand delivery can make it tough to keep spending reined in. Tracking spending can be difficult but is a key component in maintaining an accurate budget.

Ninety-five percent of our respondents reported maintaining some form of budget, whether it was as simple as keeping a running tab mentally or tracking the numbers in a spreadsheet. Nearly 74% of respondents reported keeping a general budget, while 21.4% tried to keep tabs down to the dollar.

Over a third of our respondents felt they exceed their budget. Overspending is particularly a problem among younger generations with social media bringing new visibility to modern wealth. The biggest culprit reported for this trend in overspending was dining out. Similarly, more than one-third of our respondents reported spending too much money on things they want versus things they need, compared to the only 19.7% of respondents that reported spending too little on things they want.

Budgets During COVID-19

The COVID-19 pandemic has affected financial markets and the economy in a way that few could predict. Millions of jobs were lost almost overnight, and nearly 70% of our respondents reported taking their budgeting more seriously. After an entire year of struggling through the pandemic, 53% of working adults rated their current financial situation as excellent or good, up 6% since the first month of the pandemic.

Over a fifth of respondents surveyed reported suffering at least some form of income loss. The hardest hit age group was 50+, where 25% of respondents reported losing a portion of their income. Surprisingly, more respondents aged between 20 and 39 reported an increase in income than a decrease.

For those that reported higher incomes, the most popular action for their money was saving. Alternatively, of those that suffered an income loss during the pandemic, over 64% reported spending less, and over 57% reported saving less. The most stable group among respondents was the 40 to 49 age group, where 60% of respondents had no income change, compared to only 54.2% for the least stable group: those aged 20 to 29.

Habits After Saving

When asked about saving habits, our survey respondents reported big differences in how much of their monthly income they were able to save, depending largely on their age. Additionally, respondents reported a variety of methods ranging from stocks and property to cryptocurrency.

Our respondents reported saving less as they got older. The lowest percentage of income reported saved was 26.8% by the 50+ group. The average income saved by all respondents was 30.1%. Even with savings, over 67% of respondents answered that they were at least somewhat concerned about their savings lasting through retirement. These worries could be well-founded, as 14% of Americans with retirement savings have already tapped into them. Only 10.6% of our respondents were not concerned at all about their money lasting.

Once their money was saved, 71.2% of our respondents reported storing it in a standard savings account. The second most popular place for that saved income was a checking account. The most popular place to invest for those aged 20 to 40 was in individual stocks, whereas respondents in their 40s, 50s, and beyond reported a 401(k) as their number one investment method.

Keeping a Finger on Your Financial Pulse

Approaches to financial security vary just as much with age as they do with income. Younger people simply have different opportunities and priorities than their older counterparts. But varying priorities doesn’t mean you can’t stay tapped into your investments and savings. Staying plugged in might be the key to your financial success, after all.

Managing your income successfully is a huge piece of the retirement puzzle, but it’s certainly not an easy thing to do. There are many different places to invest and just as many schools of thought on how to invest. One thing is clear: Keeping tabs on your income and investments with the help of financial advising, long-term planning, and money management can keep you on track for a healthy retirement. The experts at Personal Capital can help you assess and create a strategy for all of your needs. They can give you the tools you need to take control of your own financial health and get you set up for a more financially stable future. With free tools and expert advisors, Personal Capital can help you plan for a financially healthy future.

Methodology and Limitations

We collected responses from 1,007 respondents with full-time jobs and an annual income of over $20,000 using Amazon MTurk and Prolific. Of the 1,007 respondents surveyed, 42.3% were women, 57.6% were men, and 0.1% identified as nonbinary. Additionally, the average age of respondents was 37.3 with a standard deviation of 10.1 years.

To quantify good health, respondents were grouped based on how much they agreed with the following question: I am just getting by financially. The good health group was encompassed by the “Not at all” and “Very little” responses, the bad health group was encompassed by the “Completely” and “Very well” responses, and “Somewhat” was excluded.

The main limitation of this study is the reliance on self-report, which is faced with several issues such as, but not limited to, attribution, exaggeration, recency bias, and telescoping.

Fair Use Statement

We hope you enjoyed our survey diving into financial vitals and how folks of all ages are handling their incomes, investments, and savings. If you would like to share, please link to this landing page for any noncommercial use so our contributors earn credit for their work.

Advisory services are offered for a fee by Personal Capital Advisors Corporation (“PCAC”), a registered investment adviser with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. PCAC is a wholly owned subsidiary of Personal Capital Corporation (“PCC”), an Empower company. PCC is a wholly owned subsidiary of Empower Holdings, LLC. © 2021 Personal Capital Corporation. All rights reserved. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Third party data is obtained from sources believed to be reliable; however, Personal Capital Corporation (“PCC”) cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Personal Capital of the contents on such third party websites. Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

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