In the years prior to the Great Recession, many Americans felt more comfortable when it came to spending, carrying credit card balances and investing more aggressively. Following the economic collapse, many retreated into a more frugal way of life and became considerably more conservative in all aspects of managing their income and investments. While many analysts believed this new trend would revert back to pre-recession money management, a new study shows that this is unlikely because many Americans say the pre-recession economy will never return.
The annual Country Financial Security Index survey reveals that many people have adopted a more realistic viewpoint regarding the economy, and the realization that pre-recession strength may not return in the near future is greatly impacting their financial goals and habits. According to the research, 27 percent said the booming economic conditions leading up to the 2007 collapse will never return, and more than 50 percent said they are unlikely to return until 2015 or later. In response to these sentiments, many people said they have permanently changed the way they handle their finances. For example, 35 percent said they have downsized or cut back on spending, while 16 percent now incorporate a budget into their finances. Eleven percent carry lower balances on their credit cards and 4 percent said they make more conservative investing decisions. Thirty percent of respondents said they do all of the above.
Anticipating different needs for Americans
The recession and the many losses that stemmed from it have created a more complex picture for advisors and other financial professionals, who must now integrate more financial, insurance and tax topics in their service offerings. As more consumers want ‘one-stop-shopping’ when it comes to managing their overall finances, it’s important that marketing agencies are prepared to promote a wider variety of products and services.
“With the most optimistic believing a full economic recovery is years away, the need for people to take control of their money has never been greater,” said Joe Burhmann, manager of financial security support at Country Financial. “It’s encouraging a majority are confident they can meet their financial goals. However, financial security is different for everyone.”
Many companies that are expecting an influx of clients in 2013 are also focusing on developing new products to offer more variety to its clients, and cover losses for products that are no longer in high demand.
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