3 Ways Americans’ Financial Situations Are Changing — and 3 Steps To Improve Yours

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More Americans feel as if their financial situations are getting worse rather than better. Last year, 31% of Americans felt worse than a year before, and only 20% felt their situations had improved, according to data from the Federal Reserve and reported by USAFacts. Inflation and the cost of basic living expenses were cited as the biggest challenges, but there are ways to improve your financial situation.

Also read about a 6-step guide for beginners about financial planning.

Ways Americans’ Financial Situations Are Changing

Between 2015 and 2021, Americans generally felt like their financial situations were improving, but now the opposite is true. While 72% of Americans reported that they were “living comfortably” or “doing okay,” this was the lowest share since the onset of the pandemic in early 2020, USAFacts noted. 

Here are three ways Americans’ financial situations are changing.

Inflation and Basic Living Expenses

Over the past two years, more Americans cited inflation as the reason for their financial hardship. Inflation peaked in June 2022, USAFacts noted, reaching a high of 9.1%. Inflation has lowered significantly since then but hasn’t reached the Federal Reserve’s 2% target. 

Basic living expenses were also listed as a top concern for Americans. According to Securian Financial, Americans are spending more money to maintain the same standard of living. The average household spends nearly $11,500 more than in January 2021.

Housing

Since 2019, home prices have jumped 54%, according to a Washington Post analysis of home value data from the mortgage technology division of Intercontinental Exchange (ICE). Higher interest rates, limited inventory and rising home insurance costs haven’t helped either.

According to the National Association of Realtors (NAR), a monthly mortgage payment on the median-priced existing home is $426,900, with a 20% down payment of $2,222. Homeowners insurance rates have also seen double-digit price growth over the past year, NPR reported.

Employment

Since the beginning of 2024, several waves of mass layoffs, particularly in the tech industry, have occurred. The number of Americans filing for unemployment benefits recently increased again and is settling consistently at a higher level. PBS News reported that about 1.87 million Americans were collecting unemployment benefits for the week of July 6, which is around 20,000 more than the previous week. This is the most since November 2021.

Actions To Take

Americans’ financial situations have certainly changed over the past several years, but that doesn’t mean you can’t take steps to improve yours. Here are actions you can take to relieve some of the stress.

• Track your spending and cut out nonessential expenses: Before you do anything else, you need to know what’s coming in and going out in terms of money. How much does your household make each month? How much do you spend on bills and other expenditures? Make a list of necessary expenses and cut out anything you don’t need.
• Look beyond high-demand areas: If you’re on the hunt for affordable housing, look in areas that offer lower prices but still meet your needs. For example, the number of homes in city centers is typically much higher. Consider looking at surrounding neighborhoods that match your budget and are still within commuting distance.
• Increase your income: This is easier said than done, but cutting out expenses and increasing your income are the best ways to improve your financial situation. “One of the most accessible ways to have an additional $10,000 over the next 12 months is to ask your boss for a $10,000 raise,” Personal finance expert Jaspreet Singh recommends asking your boss for a raise or looking for a way to earn income outside your job. “This might be creating a side hustle, this might be becoming a freelancer, becoming a contractor, getting a second job or working to build your own business on the side,” Singh said in an episode of Minority Mindset on YouTube.

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