According to Lincoln Financial Group’s latest Consumer Sentiment Tracker, 33% of Americans say they’re struggling or struggling financially due to inflation and rising costs.
Respondents also said they did not expect much relief from these economic woes, with 76% saying they expect inflation, market volatility and debt to worsen this year.
However, 88% of respondents said they see room to improve their finances, and 45% said they believe their financial situation will improve this year. Additionally, 53% said they plan to set financial goals this year despite the bleak outlook for the US economy.
“It’s important to be honest with yourself about where you are financially and what your goals are,” Ed Walters, senior vice president of Lincoln Financial Group’s wealth management arm Lincoln Financial Network, said in a statement. “With a little discipline, knowledge, and guidance, you can have a strong financial year and see long-lasting results.”
If you’re struggling to pay off debt, you can consider a personal loan to consolidate your payments at a lower interest rate, saving you money each month. You can visit Credible to find your personalized interest rate without hurting your credit score.
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Inflation is cooling but the recession remains a concern
Inflation rose 0.5% in January to a 6.4% rise – the smallest 12-month rise since October 2021.
Back-to-back months of rising inflation have led many to believe it may have peaked, but persistently high prices mean inflation is likely to take longer to reach the Federal Reserve’s 2% target rate.
That means the cost of borrowing for consumers is likely to keep rising as the Fed maintains tight monetary policy rates and hikes further this year to meet its target.
The Fed has started easing rate hikes, raising rates by 25 basis points at its last meeting. This followed a 50 basis point rate hike in December.
“This latest CPI print is kept up in the air the most by the housing data component of its calculation,” said Adam Taggart, CEO and Founder of Wealthion. “This housing data is lagging behind and reflects what housing conditions were like 12 months ago, much more so than today, which are softening quickly.
“Regardless, the Fed will use this outdated data to justify another hike in the federal funds rate to tame inflation towards its 2% CPI target,” Taggart continued. “This could indeed lead to ‘over-tightening’ by the Fed, ultimately leading to a deeper, longer-lasting and more painful recession than necessary. But that’s unlikely.”
If you’re looking for ways to reduce your monthly expenses, paying off debt could be a good place to start. A personal loan could help you consolidate your monthly payments and pay off debt at a lower interest rate. Contact Credible to speak to a credit expert and see if this is the right option for you.
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Setting goals helps improve financial well-being
Although most respondents said they expect inflation, market volatility and debt to worsen this year, 53% said they plan to set financial targets. Survey respondents who set financial goals for 2022 were two to three times more likely to say their personal finances have improved, according to the survey.
“Lincoln’s research underscores the importance of a definitive approach,” Walters said. “While financial goals don’t have to be complicated, you should be able to easily track and monitor your progress. Consumer wallets are thin with many competing financial priorities, so now is a good time to get back to basics.”
Here are two changes you can make to boost your financial wellbeing in 2023:
Track and budget expenses
Tracking how you spend your money is one way consumers can flag areas where they can afford to make more cost-effective choices. Lincoln Financial advised consumers to keep it simple and start with fixed expenses like mortgages, car payments, and savings. Next, add more flexible spending like groceries and entertainment.
“Rather than set a fixed amount, consumers should aggregate flexible spending and adjust the monthly allocation of money to fit that month’s needs and plans,” the group said.
Focus on building your savings
Consumers should try to increase their savings. One way to reach that money goal is to look at your budget, Lincoln Financial said.
“Cutting back a little here and there may uncover extra money to set aside,” the group said. “These funds can be placed in an emergency savings account, an employer-sponsored retirement plan, or a college fund, or used to prioritize investments.”
If you have accumulated debt, you can consider a personal loan to pay it off at a lower interest rate. Visit Credible to find your personalized interest rate without hurting your credit score.
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