Financial Confidence

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Summary and final notes Just like overall happiness and well-being, our data demonstrates that financial confidence follows a U-curve. Those under 25 feel very confident before a swift confidence decline hits in their 30s and 40s. People appear to lose confidence in the face of growing financial responsibilities and stagnating income growth. The weight of these financial pressures is a leading cause of stress nationwide, so perhaps it is time to rewrite the confidence story. The data shows that in general, young people have fewer financial responsibilities and enough money to meet their current needs. We posit that, therefore, they tend to be more confident. As people get older—and perhaps feel like their income growth won’t keep pace with their financial responsibilities—they tend to be less confident. But if those confident 20-somethings had a better sense of what the next 10, 20 or 30 years might look like from a financial perspective and could better prepare, perhaps the reality check wouldn’t be so surprising. Could foresight be the confidence cure? In the aforementioned 2012 study for the Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America, researchers 20 Financial Confidence: Examining the U-Curve—and How We Might Improve the Confidence Trajectory
found that people across age and income levels who plan financially feel more confident about their financial decision-making, save more money, and feel better about their progress to date in saving for financial goals. 14 In fact, people who had a plan for either emergency savings or retirement were nearly twice as likely to feel in control over their finances. 15 If financial confidence is defined as how people feel about their money and, more specifically, how they feel about their ability to meet their financial responsibilities, then we could potentially replace the U-curve with a steady line upward by giving Americans the power of foresight and planning. By knowing what’s ahead and what it may take to meet future responsibilities, people can make financial decisions today that take both their current and future lifestyles into account. Perhaps by taking a page from the wellness industry, which has made it mainstream for people to care about both their current and future health, the financial planning industry can do the same. 21 Financial Confidence: Examining the U-Curve—and How We Might Improve the Confidence Trajectory
Page 1 and 2: Financial Confidence Examining the
Page 3 and 4: Financial Confidence and the Workpl
Page 5 and 6: Introduction How do people feel abo
Page 7 and 8: Curious about whether income played
Page 9 and 10: A closer look at earning power Larg
Page 11 and 12: The average income for Americans gr
Page 13 and 14: The data shows that average America
Page 15 and 16: A detailed look by decade Under 25:
Page 17 and 18: Age 25-34: “The upwardly immobile
Page 19: Age 45- 54: “The light at the end

Financial Confidence

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