Key Takeaways
- Over 75% of Americans fear that a recession will occur within the next 2 years. 44% of Generation Z think it will happen before 2022. *
- 62% of Americans said they would invest their money in stocks in a recession and 49% said that they would invest crypto.
- Americans claim that they have become more financially aware in the past year thanks to COVID-19 (61%), and inflation (47%).
- Over half (56%) of respondents chose YouTube as their top choice for preparation and education in the recession (56%).
Prepare for the Next Economic Downturn
Many people still remember the 2008 Great Recession as the worst economic downturn since The Great Depression. Many people worry that there may be another recession in the future, given the pandemic recovery, invasion of Ukraine and rising inflation. People are taking steps to protect their finances in order to be prepared.
To find out how well-prepared Americans are for another recession, we recently conducted a survey of over 1000 Americans. These people shared their biggest recession fears, their best investment strategies, as well as their motivations to be quick and smart with their finances. We also found some great advice from older generations. Continue reading to find out how Americans plan to protect their money and secure their futures.
Recession Incoming?
Some Americans feel a growing fear that there might be a recession. What percentage of people believe one will be realized in the next few years, or at the end of this year? Let's take a look at what each generation is most afraid of and their predictions.
Over three quarters of Americans fear a recession in the next two year. It's likely to happen sooner than expected, according to most people. This fear is shared by many investors and economists, who agree that a recession will most likely strike the United States in 2023.
There is no age group that is more worried about the upcoming recession than another. Gen Z was slightly more likely than others to believe that one would occur this year. For the youngest Americans, the worst part of a recession was losing their jobs. Millennials and Gen Xers feared the worst: falling behind on their bills and losing their jobs. The biggest concern for baby boomers was the possibility of having to withdraw money from their retirement savings.
Respondents still plan to invest in stock market, real-estate, and cryptocurrency, despite the consensus that there is a recession coming. 52 percent of respondents said that they would use the recession to their advantage to buy their first house. The most likely generation Zers (64%), and the millennials (55%), to do so were Gen Zers (64%), and Millennials (55%). A professional financial advisor can guide you through the various investment options and make sound decisions.
Financial Lessons: Pandemic Edition
Recessions can have a devastating financial effect on Americans. How many Americans are financially prepared to handle another one? This is a look at who's financially stable and how much they have saved to feel that way.
Nearly half of respondents believed they were financially secure enough for another recession. Americans have an average of $7,586 saved for an emergency. Gen Zers felt the most secure, while millennials felt the least safe. Surprisingly, Gen Z had the lowest amount of savings ($5,817). The most amount of emergency savings was made by baby boomers ($9,337).
Due to the COVID-19 pandemic (61%), and inflation (47%), many people were more aware of their spending habits over the past year.
The top lessons from the pandemic were to make a concerted effort in increasing savings, contribute to an emergency fund, learn how to budget better, and to make a concerted effort towards saving more. People who received financial advice during the pandemic were more likely than others to have a positive financial outcome. These people received financial advice from their employer, a designated financial advisor or online money management tools.
Wisdom words that relate to the recession
What advice can the baby boomers and GenX give younger Americans (Gen Z, millennials) in order to help them succeed financially?
The most important piece of advice that they shared was to save more and to learn how to budget. The "increase your savings" advice has been taken to heart by Millennials and Generation Zers. However, they prefer to keep a stable job over taking a budgeting crash class.
Among all the generations, YouTube was one of the top three resources for recession preparation/education purposes and the first stop for everyone but baby boomers. YouTube is the most popular choice for all generations due to its accessibility and free access.
Millennials and Baby Boomers meanwhile used financial services companies to prepare for the recession and provide education. A financial advisor was a great choice. 78% of Americans felt more financially secure and better prepared for the future because of it.
It's important that you find the right financial advisor for you, whether you are looking to speak with them for the first or second time. Ask potential advisors questions about their experience and qualifications working with clients at similar stages in their financial journey. Share your money goals and ask them how they can help. These questions and many more can help you get advice that is tailored to your needs.
This article was first published July 18, 2022.
Methodology
Personal Capital conducted a Fractl survey among 1,002 Americans to find out their financial habits and prepare for the next recession. One-sixth of the respondents belonged to Generation Z, while 48% were Millennials and 25% were Generation X. 11% were Baby Boomers. The survey was completed in May 2022.
Outliers were eliminated from short-ended, open-ended questions. Self-reporting is a limitation of survey data. Telescoping, exaggeration and selective memory are some of the limitations. The margin of error was 3 percent with 95% confidence.
Personal Capital
Personal Capital is a digital wealth management firm that assists people in transforming their lives with technology and personalized advice. Its free technology gives consumers a complete financial picture. As of 5/31/22, 3.3 million people use it to track $1.4 trillion worth of account assets. Wealth management advisors at the company provide personalized advice and expert guidance based on an individual understanding of each investor's financial situation and goals. Visit personalcapital.com for more information.
Fair Use Statement
You can share our findings with anyone you know who is worried about an upcoming recession. Please do not share this information for commercial purposes. We also ask that you provide a link back at the original page to give credit to those who contributed.
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By: Personal Capital
Title: More than 75% of Americans Predict a Recession: What They’re Doing to Prepare
Sourced From: www.personalcapital.com/blog/whitepapers/preparing-for-the-next-recession/
Published Date: Tue, 20 Sep 2022 15:00:33 +0000
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