Are You Confident in Your Financial Resilience?

Are you financially confident, or does it feel like your financial goals are futile?

If you’re in the latter bucket, you’re not alone. Increasingly, Americans are expressing that the status of their financial goals have gone from “achieved” to “work in progress,” according to a November survey conducted by The Harris Poll on behalf of Personal Capital and Empower.

In the survey, just 40% of the 2,006 respondents said they felt economically confident, despite an apparently strong stock market, reports of job growth, and a somewhat recovering economy. Financial confidence is down 2% from this time last year and 12% from pre-pandemic levels, according to the data — indicating some complicated emotions around money.

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What is Financial Resilience?

Financial confidence has a number of health implications, from trusting your ability to pay for emergency medical bills to the mental health costs of grappling with money anxiety. Meeting those baseline financial milestones, like the ability to retire on your terms and putting savings aside for unexpected emergencies, has always been considered fundamental in the hierarchy of financial needs.

Yet Americans seem to be lowering their bar, according to survey data. Whereas before the pandemic, most people said $100,000 was a good savings goal in order to achieve financial health, today, over half (51%) have dropped their expectations and say they need less.

So are we just adapting to a widespread public health emergency — or have Americans gotten a little depressed? You’d think it was pessimism, but according to the survey optimism is actually rather high.

It’s true Americans have settled for less in their emergency funds, but survey respondents reported feeling, perhaps paradoxically, more confident in their ability to optimize financial health than pre-pandemic levels. The top emotions associated with optimizing financial health were “hopeful” and “optimistic” — two adjectives that you don’t see in the news very often.

According to the survey, most Americans are meeting needs for survival (96%) and stability (92%). However, Americans consider themselves a “work in progress” when it comes to financial independence. Just 78% of people said they had achieved this level of financial health. The data tells us that while Americans are checking all the basic financial health boxes, they still hope to “level up” their financial goals moving forward. And honestly — this might not be a bad sign at all.

Take Stock of Where You Stand – And Where You Want to Go

If you’re feeling like you’ve gone “two steps forward, one step back” with your financial goals, you’re in good company. It’s important to keep your money in perspective during this time, and celebrate yourself for making it through the last two years. Take the dawn of a new year as an opportunity to evaluate where you stand financially — are you surviving, stabilizing, or thriving?

“For some, the pandemic has been and continues to be highly disruptive to income,” says Craig Birk, Personal Capital Chief Investment Officer. This dip in consumer confidence, argues Birk, comes from multiple factors — some very tangible and some more emotional.

“The last two years have been unsettling,” he says. “We were all reminded that life is volatile.” Meanwhile, even though the election is more than a year past, Birk argues that heightened political division continues to impact views on stability.

There’s also the question of inflation: “The idea that what you have may not really be worth what you thought it was can also be very unsettling,” says Birk. “And the explosion of wealth in the technology sector has left many feeling left out. Never before have so many millionaires and billionaires been minted so quickly.”

So how can Americans improve their financial confidence? The first step is to know where you stand and have a plan, which is where a free tool to track your wealth and budgeting comes in. Personal Capital found that survey respondents who reported using a financial planning tool are more likely to say that their financial confidence has increased in the last year, and are more confident in their ability to reach major financial goals like building an emergency fund, being debt-free, having a good credit score, and more.

And if your long-term goal is financial independence — who doesn’t want to achieve that level of freedom? — don’t get too discouraged with the natural back-and-forth of progress. If you’ve had to dip into your savings this year, or even have learned to live with less, take those adjustments as a sign of your financial resilience. Remember that financial resilience is a natural part of life, and as long as you remain focused on your clear goals ahead — nothing can derail you forever.

Read the Report: 2022 Wealth & Wellness Index
Author is not a client of Personal Capital Advisors Corporation and is compensated as a freelance writer.