Younger Americans Bearing the Brunt of Pandemic Financial Stress: AICPA Survey
NEW YORK - In the year since the COVID-19 Pandemic began impacting all facets of American life, new data shows young adults are three times more likely to say they are experiencing pandemic financial stress compared to older adults. Three in four younger Americans ages 18 through 34 (75 percent) say they have been at least somewhat stressed about their financial situation since the pandemic began, compared with about 1 in 4 (27 percent) older Americans ages 65 and up. This according to new research conducted by The Harris Poll on behalf of the American Institute of CPAs (AICPA).
“Financial stress at any age can have a negative impact on a person’s wellbeing. For many younger Americans, this is the first time they have experienced this level of economic uncertainty, whereas older generations have already lived through recessions and depressions,” said Gregory J. Anton, CPA, CGMA, chairman of the AICPA’s National CPA Financial Literacy Commission. “Keeping perspective and finding comfort with what you can, and can’t, control is a good starting point to help alleviate financial stress.”
Financial Stress Impacting Mental Wellbeing
Since the start of the pandemic, Nine in ten young adults who have experienced stress about their financial situation (91 percent) say it has had a negative impact on their mental wellbeing, including 3 in 5 (59 percent) who say the negative impact has been major or moderate. For older adults, the prevalence of financial stress having a major or moderate negative impact on their mental wellbeing is less by nearly half (33 percent).
The study found that among young adults who said that they experienced stress about their financial situation, nearly all of them (91 percent) have had it impact their everyday life. This most commonly manifested itself as feeling sad or down more often than normal (52 percent), frustrated more often than usual (49 percent), or having trouble sleeping at night (48 percent). Lack of interest or enjoyment in normal hobbies (45 percent) and changes in eating patterns (44 percent) are also prevalent symptoms of financial stress in young adults.
Younger Americans consistently show higher rates of psychosomatic symptoms, like feelings of sadness and frustration, or lack of interest in normal hobbies, compared to older Americans. Among older adults who have experienced stress about their financial situation, about two-thirds (68 percent) have had it impact their everyday life, most commonly having trouble sleeping at night (41 percent), feeling frustrated more often than normal (40 percent), or feeling sad or down more often than normal (31 percent).
Steps to Help Manage Financial Stress
The good news is you don’t need to be held hostage by financial stress. There are several steps Americans can take to help reduce financial stress and anxiety. The AICPA’s National CPA Financial Literacy Commission recommends these three steps as a starting point.
1. Keep perspective and know what you can (and can’t) control
Markets go down, but they also go up. These fluctuations are often out of your control. But it is generally easier to manage finance-related stress if you understand the financial issues that can be addressed, and which are out of your control. One great way to take control of your finances is to build a solid financial plan. A CPA can help you determine your unique retirement and savings needs as well as investment growth targets, and then incorporate those pieces into a tax-efficient financial plan to help you reach those goals.
2. Take inventory of your finances
It’s important to know where you stand financially, including regularly reviewing your spending habits, debt levels, savings and investments, and credit reports and scores. Start by reviewing your cash flow. It’s important to know how much is coming in, where you are spending, and where you can cut expenses and increase savings. You will need to inventory all debt and categorize it by type, institution held, interest rates and maturity dates. Also look at all recurring costs, such as utilities, to determine what must be paid each month.
3. Find opportunities and tools to help you today and in the future
One great way to reduce your financial stress it to put much of your money management on autopilot. Take advantage of autopay options to reduce how many bills and payments you have to remember each month. At the same time, set up automatic savings plans to build an emergency fund for future economic downturns. You can also leverage apps and other software to track your spending and find areas to cut back.
How Financial Professionals Can Help Americans
Knowing what you can and can’t control is great first step to help reduce financial stress. Knowing how to be strategic with what you can control is the effective next step. Financial professionals looking to develop the essential skills to best guide their clients, helping to mitigate potential financial anxiety, will benefit from in-depth technical sessions and panel discussions at the Advanced Personal Financial Planning (PFP) Conference at AICPA & CIMA ENGAGE 2021. The conference agenda has been curated to feature the most up-to-date practical information and technical knowledge in the areas of tax, retirement, estate, risk management, investments and more.
Additional Survey Findings:
Financial stress is much higher for renters (72 percent at least somewhat stressed) than it is for homeowners (52 percent).
Overall, since the start of the pandemic more than half of Americans (57 percent) indicate that they have been at least somewhat stressed about their financial situation, including a quarter of Americans (27 percent) who have been extremely or very stressed.
Nearly all who have experienced stress about their financial situation (89%) have had it impact their everyday life, most commonly feeling frustrated more often than normal (50%), feeling sad or down more often than normal (48%), or having trouble sleeping at night (47%). Lack of interest or enjoyment in normal hobbies (39%) and changes in eating patterns (34%) are also concerningly prevalent impacts financial stress brings to daily life.
Nearly nine in ten of Americans who have experienced stress about their financial situation since the start of the pandemic (88%) say it has had at least some negative impact their mental wellbeing, including more than half (53%) say the negative impact has been major or moderate.
Throughout 2021, the AICPA will be exploring the impact of COVID-19 on consumers, businesses and the accounting and finance profession through the Respond, Reinvent, Recover+ campaign. For more information, please contact Jon Lynch jonathan.lynch@aicpa-cima.com or James Schiavone james.schiavone@aicpa-cima.com
Methodology
This survey was conducted online within the United States by The Harris Poll on behalf of AICPA from January 13-15, 2021 among 2,040 U.S. adults ages 18 and older. Young adults are survey respondents age 18-34 (n=497). Older adults are survey respondents age 65+ (n=123). For complete survey methodology, including weighting variables and subgroup sample sizes, please contact jonathan.lynch@aicpa-cima.com.
About the AICPA’s 360 Degrees of Financial Literacy Program
The AICPA’s 360 Degrees of Financial Literacy Program is a nation-wide, volunteer grass-roots effort to help Americans develop a better understanding of money management and take control of their financial lives. Since 2005, the AICPA has been empowering people to make better decisions with the tools and resources on the 360 Degrees of Financial Literacy website. Financial Literacy is the cause of the CPA profession and the 360 Degrees of Financial Literacy program is the AICPA’s flagship corporate social responsibility effort. These efforts are focused on financial education as a public service and are completely free from all advertising, sales, and promotions. Connect on Facebook for tips, insights and motivation to keep your finances on track.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 431,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
