A new survey that explored people’s perceptions of their financial health amidst the current economic climate and its impact on their spending and saving has just been released.

“The past year has been topsy-turvy for consumers from an economic perspective, so we wanted to take the temperature of how people are feeling about their financial health and spending power,” said Eric Dunn, CEO of Quicken. “With more than half reporting that their financial situation has deteriorated in the past 12 months, we found that many are prioritizing saving for their emergency fund while considering cutting down on expenses like streaming services, retail, and restaurants.”

People Adjusting Financial Habits 

The past year has seen rising prices and inflation, waves of layoffs, and warnings of a forthcoming recession. As a result, half (51%) of survey respondents feel anxious when thinking about the current economic situation, with nearly half (48%) feeling frustrated and nearly a third (31%) scared.

The challenging economic climate is impacting consumers’ financial power and decision-making when it comes to their money. Two-thirds of people had to take financially restrictive actions over the last 12 months, including delaying a big purchase (29%), pushing out vacation or travel plans (27%), selling possessions (18%), dipping into a 401K (16%), liquidating investments (15%), stopping using a credit card (15%), or picking up an extra job (11%). As one respondent noted, “I am buying less because everything is so much more expensive.” It’s no surprise, considering more than half of consumers (53%) ranked inflation as their biggest concern among inflation, layoffs, interest rates, and stock market performance.

Emergency Funds Coming into Focus 

Two-thirds (66%) of people say that the current economic situation has made them rethink how much they should have in an emergency fund, and they are trying to increase their savings as a result. Emergency funds are especially on the minds of those who have been laid off in the past 12 months, with 90% saying that the current economy has made them rethink how much they should have in an emergency fund, compared to 72% of those who have not been laid off. One respondent commented, “We will have to cut back and focus on saving till we get back on our feet.”

When looking across the generations, millennials have seen their emergency funds drop most significantly in the past year. The number of millennials with more than four months of emergency funds has decreased by 11% over the last twelve months, compared to Gen Z, where that number has increased by 7%. Those with more than four months of emergency savings in Gen X and Boomer generations have remained stable.

Housing is Currently a Challenge 

When it comes to housing, which is traditionally one of the people’s largest expenses, one in four (28%) say that their current financial situation has adversely changed their housing situation. This reality is heightened for those who have been laid off in the last year (55%). Thirty-seven percent of those laid off in the last twelve months have had to move due to their current financial situation, whether to a new home or apartment, or a new city or state, compared to only 9% of those not laid off.

A significant portion of Gen Z (54%) and millennials (43%) say that their current financial situation has adversely changed their housing situation (compared to 33% of Gen X and 9% of Boomers). Out of those adversely affected in their housing situation by their current finances, 38% say they want to be financially cautious now due to current economic conditions/inflation. Another third (35%) say rising interest rates have priced them out of the home market.

More Layoffs Mean More Spending Cuts 

As people contemplate what their financial health would look like amid a layoff, many expect to make spending cuts in other categories they typically spend money in. If laid off, the top four things that consumers would first consider giving up include streaming services (49%), clothes and accessories (42%), dining out (40%), and travel (40%). Additionally, for those with kids, over half (56%) would give up or consider giving up childcare services in the event of layoffs. Pet owners are more reluctant, with only 38% reporting that they would be willing to cut back on pet-related expenses.

Dunn added, “As consumers curb their spending in areas like entertainment, dining, and travel, we may see corporate cost-cutting spread to those industries, extending 2023’s trail of layoffs and resulting economic challenges.”

Despite Economic Hardships, Some Lending Help 

There’s a silver lining for those who have been recently laid off. Nearly half (46%) of respondents who had been laid off in the past 12 months report that friends or family have given or lent them money. And 2 in 5 have had their friends or family provide support services like paying for a meal or babysitting their children.

A third (33%) of people who haven’t been laid off in the past year have offered, given, or lent money to someone negatively affected by layoffs or the current economic climate. Those who have helped someone who was negatively affected are twice as likely to feel excited (13%) about the current economic situation than those who haven’t helped someone (5%). Similarly, those who have helped are twice as likely to see opportunity when looking at the current economic situation (13% vs. 6%).

This SurveyMonkey online poll was conducted in March 2023. The survey consisted of a sample of 865 adults, ages 18 to 74, from the Cint consumer network.

Source: Quicken