The Complete 2022 Wealth & Wellness Index can be found here

According to a Harris Poll*, Americans are more uncertain about the U.S. economy. This is a drop of 2% and 12% respectively from pre-pandemic levels. The perception of personal financial well-being is also a concern. 34% claim they are "very financially sound" today, as compared to 48% for the first quarter 2021.

The U.S. economy is generally improving. After its plunge into bear territory in 2020, the American stock market recovered strongly. The pandemic was a major disruption to income. However, the labor market is strong. More than 80% of jobs lost due to the pandemic are now regained, unemployment rates are normalized, and job seekers have the Great Resignation to their advantage.

Despite the general decline in confidence among Americans at macroeconomic and personal levels, these individuals are on average financially stable. In 2022, many people will prioritize their finances.

Additionally, the new Wealth and Wellness Index shows that a large majority of Americans can meet their basic needs. Why is financial confidence declining?

Americans Are Facing Numerous Headwinds

Craig Birk, Chief Investment Officer at 11 Ways to Make Money, believes that anxiety can be caused by multiple factors.

1. The last year was generally not a happy one.

Morning Consult said it best: "Insurrection. Inauguration. Infection. Inflation" Indeed, the news that rocked 2021 was a mix of political, public health, and consumer prices.

Birk states, "We've all been reminded life is unpredictable," and that this can reduce financial confidence.

2. Many people are feeling inflation for the very first time.

The U.S. inflation rate grew 6.8% in 2021, the highest rise since 1982.

Our survey found that Americans are most concerned about their expense-to-income ratio. 37% said they couldn’t handle an unexpected $100 expense without worrying, while 47% said they couldn’t handle $500 without worrying. Nearly half (44%) of respondents said that income is the most important factor in determining financial well-being. This is a 10% increase from last year.

Birk says that inflation has become a common reality in our daily conversations at the kitchen table. It can be troubling to think that your income or assets may not be as valuable as you thought.

3. Many feel left out by the explosion in wealth in technology.

The news isn't just true, it's available to investors.

"Never in history have there been so many millionaires or billionaires who were able to do so quickly. Birk believes that social media has made this wealth much more visible than ever before. The vast majority of people who are not rich have a natural feeling that they are missing out.

It's amazing that Americans feel positive about the future despite all the pressures. 40% reported feeling optimistic and hopeful about their chances of succeeding financially.

Perhaps it's because of their futuristic outlook. As we approach the third year anniversary of the pandemic many Americans surveyed are aiming for long-term financial goals.

Financial Goals are Top Priorities in 2022

Financial goals will outpace lifestyle resolutions like losing weight or exercising more in the new year.

James Burton, Chief Marketing Officer at 11 Ways to Make Money, says that the fact that debt repayment is more important than exercise shows that many people want to improve their financial health. It is clear that financial confidence is directly linked to overall health, and wellbeing.

Here are the 2022 goals of survey respondents.

Survey respondents identified a few areas of concern and interest for the next year. Here are some insights about the top four areas: cryptocurrency, retirement planning, debt, wage/price issues, and debt.

Retirement Planning

Americans are focused on planning for the future, and "retirement plan" is the most popular financial topic that respondents want to learn more about in the coming year.

These are the top financial topics that survey respondents want to know more about:

Retirement is the ultimate goal for many people. It's also a lengthy game. It involves:

• How much money will you need to have the lifestyle you want in your golden years
• To ensure you have this amount before your retirement date, create a plan
• Follow through until your retirement and then execute a plan to withdraw from your investment accounts

Get Started: Create Your Retirement Plan

Retirement planning involves a lot of personal decisions and nuance. Technology and fiduciary advice are helpful in bringing the process to a clearer focus. Birk suggests a suggestion: "Using a great retirement planning tool can prove extremely valuable in planning savings and withdrawal rates as well as investment strategies."

Cryptocurrency

According to a survey, cryptocurrency is the most popular topic for Americans after retirement planning. It's not hard to see why. Bitcoin and other cryptocurrency have been dominating the financial news cycle for the past year, as well as years before. Nearly 33% of respondents to a survey by 11 Ways To Make Money from mid-2021 said that they had invested in cryptocurrency. The top reason they chose to invest in crypto was "fun to play with". It's fun to play with, according to 47.2%.

Birk believes that crypto-investing is speculative because of the volatility. He offers two options based on an individual's financial situation, risk tolerance and interest.

• " If Bitcoin or any other crypto is something you believe in, you should take the time to understand the various ways you can buy it and make an allocation that will not affect your emotions if things go wrong. Even though they may not be immediately apparent, most crypto trading fees are high. You shouldn't be buying and selling crypto often; it is difficult to predict the fees. If you have the time, it is worth learning about blockchain and crypto. They are fascinating. It's easy to get lost in the excitement. Make sure you always look at the source.
• You don't need to believe in it. A cryptocurrency can have high returns, or lose its most value. This doesn't have to affect you.

Debt

Overall, increasing concerns about debt are evident: 49% of Americans don't feel their debt can be managed, while 32% of Americans are in debt (down 7% compared to last year).

Respondents' top goal is to pay off their debt by 2022. Personal debt is the highest priority followed closely by mortgage and medical debt.

Birk agrees with the statement that eliminating high-interest debt should be the first financial priority in many cases.

Use the Debt Payoff Calculator to Calculate Your Score

Low-rate debt such as mortgages can be worth keeping, depending on the person's financial situation. He says, "Imagine a future in which you have a mortgage at 3% and bonds yielding 4%, and a portfolio with a higher expected return. That's a great environment to build wealth."

Wage/Price Challenges

Americans say that rising inflation is affecting their financial health and that they are facing increasing expenses and their salary.

Survey respondents now believe that to feel financially secure, one must earn $128,000 per year. This is nearly twice the national average.

Birk states that making more money is great but, due to the law reducing marginal utility, people with higher salaries are less happy. Saving a significant percentage of your income is a way to improve financial health, regardless of how much you make.

Read More: The 50-30-20 budgeting rule: Is it Right For You?

5 Steps for Financial Confidence in 2022

Money management becomes more complex as a person's finances become more complicated. Birk states that his advice for the year 2012 is the same as every year. First, create a plan. These are the five steps that will help you to make or improve your plan.

1. It all starts with understanding where you are at the moment.

First, you must know your financial situation. Many people don’t know what their net worth is, how much they’re saving and how they’re spending their money.

Financial tools can provide clarity and help you take action. Birk states, "It's amazing how much relief it can be, to understand your cash flow, your investments and where you stand for retiring,"

2. Set concrete, time-bound goals.

Once you have a clear understanding of where you are at the moment, it's time to start thinking about where you want to go. To give an example, "I want to save $20,000 each year to buy a house in 2026 and retire at 60." To review their monthly savings and spending patterns, some people use a monthly money date.

Birk recommends that you find a healthy balance in your life just as you would in other areas.

COVID reminded me that it was important to plan for the future but also to enjoy the moment. "While the majority of people should save more, we see that many people are oversaving and missing out on great life opportunities.

How can you keep your cash but also spend it? Consider where your money should be kept for various purposes, such as ongoing expenses, retirement planning, savings for emergencies, long-term and short-term goals, or retirement.

3. Find financial friends.

Financial confidence can be encouraged by moral support. The majority of Americans we interviewed turn to people they trust, such as their family, financial advisors, and retirement providers. They also sometimes rely on friends, colleagues, and the internet.

Here's how respondents ranked their financial ally at the beginning and end of 2021.

Although your family and friends can cheer you on, professional advice may be a better option for your financial plan.

Advisors are:

• Higher confidence in retirement savings (70% vs.53%)
• 46% are more likely to feel very financially well (vs. 31%)
• People are more likely to report that their financial health has improved in the last year (70% vs. 59%).

Birk says that a good advisor can give you tremendous confidence in your investment strategy as well as your financial planning overall. This person will provide you with the tools and advice that you need and help you to see the trade-offs in various decisions.

Birk suggests that you should be open with your coworkers if they are already working with you. "Are they adding value? Are they improving your confidence?" Make sure you understand how they are compensated.

Fiduciary financial advisors have a legal obligation to act in your best interests and with integrity. A fiduciary who charges a fee does not get paid on commission.

Are you paying too many fees? To find out, you can use the free online calculator for investment fees.

4. Avoid bad advice.

According to the survey, Americans look first to their families for financial support. Birk cautions that family and friends may not always be supportive in reaching financial goals.

He suggests that you look for people who have been successful over many decades and who have built wealth. "Be skeptical of anyone who has made a lot of money recently."

Despite this, the percentage of people who rely on financial advice from a professional (22%) is about the same as the number of people who use the internet (21%). Many people are reluctant to seek professional advice because they have had bad experiences with stock brokers or other negative associations.

Birk states, "It's true. Working with someone who is only looking to make commissions is unlikely to lead to a happy ending." There is more information and awareness about how to find an advisor that you can trust. Make sure to understand your investment strategy, and the costs involved.

5. Keep a long-term, dynamic plan.

Financial planning shouldn't remain static. It should change with your life, lifestyle goals and retirement plans. It should be unique to you. Financial confidence will follow if this is the case.

You can execute your plan if you know where you are and what you're doing. Birk says that you don't have to be overwhelmed. Then you can put your focus on the things that matter most to you in your life.

Do you want a better way of managing your investments? Millions of people use 11 ways to make money's secure online financial tools. They can view all their accounts, analyze their investments and plan for long-term goals like buying a home or saving for retirement.

11 Ways to Make Money - Get started

By: Alicia Castro
Title: 2022 Wealth & Wellness Index
Sourced From: www.personalcapital.com/blog/whitepapers/2022-wealth-wellness-index/
Published Date: Mon, 10 Jan 2022 13:45:37 +0000

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