The Principal Financial Group’s latest Principal Financial Well-Being Index shows widespread financial concern actually seems to be having a positive impact on financial wellness and savings decisionmaking. For instance, the research suggests more than half of employees (52%) have taken action to monitor their spending levels in the past year, and nearly two in five (39%) created a budget to keep finances in check, up significantly from 28% who created a budget two years ago.
The survey identified other positive financial behaviors that are emerging alongside generally high levels of financial stress. In order to help maintain their financial health in the event of a job loss or other unexpected event, nearly three in five (57%) now have an emergency fund in place. Those who work with a financial professional, the Principal says, are 1.5 times more likely to have an emergency fund in place. But the news isn’t all positive, as nearly 20% admit they have recently dipped into their emergency fund to cover monthly expenses.
“It’s encouraging to see American workers planning for unforeseen hurdles by giving themselves a financial checkup and setting aside money in an emergency fund,” explains Luke Vandermillen, a vice president at the Principal Financial Group. “Despite a few missteps, like using the fund on monthly bills, these positive behaviors show individuals are making strides and taking personal responsibility to improve their short and long-term financial well-being.”
Interestingly, worries about saving enough for retirement seem to decline with age, as only about one-third (35%) of Baby Boomers say they feel stressed about finances, compared with half of Generation Y workers (51%). Those working with a financial professional were also much less likely to feel stressed about their finances than the general working population, at 33%.
In another positive sign, findings show more American workers will use 2014 tax refunds to beef up their nest eggs, with 50% of workers planning to save or reinvest their refunds—up 5% from last year. More than a third (38%) plan to pay down or pay off short-term debt with a tax refund, and slightly less than a quarter (24%) will pay down or pay off longer-term debt. The majority of American workers (68%) expect a tax refund this year.
Vandermillen says the quarterly release of index data shows American workers increasingly recognize the long-term financial benefits of staying healthy. In fact, American workers view themselves as more physically fit (57%) than financially fit (28%). And while employees report lagging financial health, most (84%) recognize that maintaining physical health is an investment in their financial future.
“American workers recognize the long-term financial benefits of staying healthy, but financial stress is often a constant pressure that can have a significant impact on their physical health,” Vandermillen says. “With spring in full swing, now is a good time for Americans to apply their good fitness habits to their financial lives as well. Mark some time on the calendar for financial spring cleaning, meet with a financial adviser, set goals and take action.”
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