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Between higher costs and a possible recession on the horizon, families feel increasingly strained financially.
More than half, or 58%, of all Americans are now living paycheck to paycheck, according to the CNBC Your Money Financial Confidence Survey, conducted in partnership with Momentive.
And even more — roughly 70% — said they feel stressed about their finances, mostly due to inflation, economic uncertainty and rising interest rates, the survey found.
"Whether or not you have significant wealth, everyone is feeling squeezed," said Misi Simms, portfolio manager at TIAA, a Fortune 100 financial services company.
How to manage financial stress
Adults who are struggling to afford their day-to-day lifestyle feel even more under pressure, according to the CNBC survey conducted in March. They are three times more likely to say a lack of savings or credit card debt is a problem and twice as likely to fear being laid off. They also are more likely to worry about health-care costs and student loan debt.
With stress mounting, the overall financial health of U.S. employees has plummeted overall to only 55% — down from 64% a year ago, according to MetLife's annual Employee Benefits Trends study.
"People are in survival mode," said Lindsay Bryan-Podvin, a certified financial therapist and partner of Upwise, MetLife's Financial Wellness App.
People are in survival mode.
Lindsay Bryan-Podvin
certified financial therapist
Bryan-Podvin advises clients to start by checking in with their "money mood."
Connecting how you feel to your financial actions, such as making a big purchase or working toward a future goal, helps break free from negative spending and savings patterns, Bryan-Podvin said.
"One of the easiest ways to put this concept into immediate action is by starting to celebrate any small financial 'wins' you achieve on a daily, weekly or even monthly basis," she said.
For example, jot down a few minor goals or milestones you can work toward in the near term, like reducing your subscription count to 10 from 15 or committing to no more than two takeout orders a week, she said.
Once you've accomplished one of your goals, treat yourself to something that sparks joy or makes you feel good.
As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.
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- These steps can help close the racial retirement gap. 'It's not what you make, it's what you keep'
Of course, financial literacyis also key to an improved outlook and less stress, according to TIAA's Simms.
Many studies show a strong connection between financial literacy and financial well-being.
Those with greater financial literacy find it easier to make ends meet in a typical month, aremore likely to have higher credit scores and tap lower-cost loans, and less likely to be constrained by debt or be considered financially fragile.
They are also more likely to save and plan for retirement, according to data from theTIAA Institute-GFLEC Personal Finance Indexbased on research over several years.
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Companies are investing in programs that support their employees' financial education
The Exchange
While there is an importantrole for schoolsto play, a financial education shouldstart at home and continue in the workplace.
"Ask your employer if you can speak to a financial representative," Simms said. "And then, whatever you learn, take that to your children."
"We talk to our kids about so many things," he added. "We should also be talking to them about financial literacy."
How to get your finances in check
When it comes to better managing your finances, one of the most effective tools is to start with a budget, said Sabino Vargas, senior financial advisor at Vanguard — even if that means going back to a basic envelope-stuffing methodto stay disciplined in your spending.
Vargas recommends further strengthening your financial standing by paying down debt, particularly high-interest credit card balances, to improve your monthly cash flow so you can set even more money aside in savings.
"Understand where money is coming from and where it is going," Simms also said.
"You may not have three to six months in an emergency fund, but try to commit something to savings," he advised. "Everyone has to start somewhere."
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To that end, Vanguard's Vargas suggests paying yourself first. "If you're struggling to keep track of expenses, try paying yourself first the day your paycheck hits," he said.
This includes putting money toward emergency savings or a retirement fund and any necessary expenses like rent, car payments and insurance. That will help build up your savings while also prioritizing your largest and most important expenses. (If your employer has a401(k) plan and offers a match, always contribute enough to get that match, he also advised.)
But just because you're looking to save more, doesn't mean you have to give up all indulgences, he added.
To avoid overspending on discretionary items or activities, such as going out to eat, it may help to set a monthly budget for how much you can spend, as well as how often, "so you are not sacrificing the things you really enjoy," he said.
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'CNBC Your Money' survey shows 70% of respondents are financially stressed
Squawk on the Street
The article you've shared covers various aspects of financial stress and methods to manage personal finances effectively. Let's break down the key concepts and advice presented:
Financial Stress and Its Impact
- Financial Strain Statistics: More than half of Americans live paycheck to paycheck, and around 70% feel stressed about their finances.
- Causes of Stress: Inflation, economic uncertainty, rising interest rates, lack of savings, credit card debt, fear of job loss, healthcare costs, and student loan debt contribute to financial stress.
Strategies to Manage Financial Stress
- Check-in with "Money Mood": Connecting emotions to financial actions helps break negative spending patterns.
- Celebrate Small Wins: Acknowledging and celebrating small financial achievements can positively impact financial behaviors.
- Financial Literacy: Enhancing financial knowledge can significantly reduce stress and improve financial well-being.
Tips for Better Financial Management
- Start with Budgeting: Creating and sticking to a budget is a fundamental tool for managing finances effectively.
- Debt Repayment: Prioritize paying off high-interest debts to improve monthly cash flow.
- Emergency Savings: Aim to commit something to savings, even if you can't immediately achieve a fully funded emergency fund.
- Pay Yourself First: Direct a portion of your income toward savings and essential expenses as soon as you receive your paycheck.
- Prioritize Essential Expenses: Focus on crucial expenses like rent, car payments, insurance, and contributions to retirement funds.
Additional Advice
- Financial Education: Learning about finances is crucial and should ideally start at home and continue in the workplace.
- Balancing Savings and Enjoyment: While saving is important, it's also essential to allocate funds for enjoyable activities without overspending.
The article emphasizes the importance of financial literacy, budgeting, debt management, and savings as essential components of a healthy financial life. It also suggests seeking guidance from financial representatives and employers to improve financial knowledge and stability.
