A new survey from Wells Fargo revealed that Americans find discussing personal finances as difficult as talking about other thorny discussion topics like religion and politics. Nearly half of Americans say the most challenging topic to discuss with others is personal finances (44%), whereas death (38%), politics (35%), religion (32%), taxes (21%), and personal health (20%) rank as less difficult. These results come from Wells Fargo’s Financial Health study, a national online survey conducted by Market Probe, Inc., of 1,004 adults between the ages of 25 and 75, designed to take the pulse of Americans’ perceptions of their own financial health.
“It’s not surprising people don’t want to talk about money, investments, tax strategies, or even how much to put aside for a child’s education,” said Karen Wimbish, director of Retail Retirement at Wells Fargo. “But not spending time today to think about the future can be costly in the long-run. I think of personal finance in the same vein as my health—I wouldn’t keep concerns about my physical health private. I’d consult a doctor or talk to a friend or family member about it.”
Although people find it easier to talk about politics and religion over money, that doesn’t mean financial concerns are not top-of-mind. Two in five (39%) Americans report that money is the biggest stress in their life, 39% say they are more stressed about finances now than they were last year, and a third of Americans (33%) report losing sleep worrying about money. When asked what they would do differently if they could go back five years, more adults cite regrets about saving and spending (49%) than about shortcomings in all other areas of their life, including taking better care of their physical health, diet and fitness (42%), pursuing different personal relationships (21%), and working more to improve their career (16%).
Knowing what to do also appears to be a major barrier to a healthier financial life. In terms of getting in physical shape and exercising, respondents said the hardest part is “motivating themselves to get started” (40%) and “sticking to a plan” (36%). But for financial health and saving money, the hardest part is “knowing the best approach” (35%) and “sticking to a plan” (35%). Only 9% of respondents said motivation was the biggest barrier for improving financial health. In addition, about a third report they are more worried about their financial health than their physical health.
“When someone is physically out of shape, they typically understand that eating well and exercising more will help get them back on track,” said Wimbish. “With money, however, there’s a lack of understanding about the importance of designing a plan. Only a third of adults have some type of financial plan or a simple household budget in place, which means most Americans don’t have the roadmap needed to improve their financial health.”
According to the study, a majority of Americans feel financially healthy when addressing their basic needs, but feel less so when trying to control spending and saving for retirement and emergencies. Two thirds (67%) feel in financially good or great shape with regards to paying their monthly bills, and over half (56%) feel financially good or great in their ability to live within their means. However, only 40% feel financially good or great about their amount of discretionary spending and about their “rainy day” savings. Only a third (33%) described feeling good or great shape in their ability to retire comfortably.
Conversations about money
Seventy-one percent of adults surveyed learned the importance of saving from their own parents. Despite this, only a third (36%) of today’s parents report discussing the importance of saving money with their children on a frequent basis, with 64% indicating they talk about savings with their kids less than weekly or never.
For a quarter of married or partnered adults (25%), financial concerns have had an impact on these relationships. About a third (33%) have difficulty discussing money with their spouse or partner, and a quarter (25%) often have heated discussions with their significant other about money and household finances.
The study revealed some distinct differences between women and men when it comes to money matters. Half of women (50%) find it difficult talking with others about personal finances, versus 38% of men. Women are also less confident about their investment knowledge. Only 29% of women said they know where to invest in today’s market (compared to 42% of men).
Almost half of women (45%) grade their financial literacy a ‘C’ or below, while 65% of men assess their level of financial literacy as a ‘B’ or higher. Men also express greater confidence in their ability to maintain their standard of living, with 57% feeling in good or great financial shape in this area versus 49% of women.
The study also revealed the following saving and spending-related behaviors:
- Adults are far more likely to have their car serviced (82%) or take a vacation each year (69%) than review their finances (43%).
- Those who feel to be in poor or average financial health are twice as likely to update their Facebook profile (47%) than they are to review their finances (25%).
- Two-thirds (65%) of adults spend at least two hours watching television each day, while only one third (34%) spend at least 15 minutes thinking about their finances daily.
- One in four (25%) adults would rather pay for a personal trainer than a financial advisor.
- About a third (32%) of retirees feel more stressed financially now than they did before retiring—especially those who retired early (before age 60).