One year ago, a mandated stay-at-home order was in place, we were debating who’s considered “essential,” and many of us did not know what would happen to our jobs and businesses. While 2020 was an uneasy year for many of us, a majority of Americans now feel neutral to very confident about the economy according to recent studies from Travis Credit Union (TCU).
Travis Credit Union published two surveys in which they asked participants about their financial wellbeing. One conducted at the end of 2020 asked 2000 participants about their year’s spending and saving habits. Another survey of 2052 participants, recorded between February to March 2021, measured fiscal wellness and tracked trends within the younger generations.
Among the respondents in the first survey, fifty percent reduced their spending in 2020 than in years prior, with 67 percent of them saying that was a conscious decision. Two-thirds of participants delayed large purchases due to the uncertainty of COVID-19, admitting that the industry with the biggest hindrance was travel. 51 percent have big travel plans at a standstill. 39 percent of people held off from buying a new car and 34 percent are putting a pause on purchasing a new home.
When reviewing their year-end budget, half of the participants saw an increase in purchasing household supplies, 34 percent increased their dining and takeout spending, and nearly 30 percent had an increase in alcohol. 50 percent admit to anxiety-induced spending, using shopping as a coping mechanism. The average spend was between $24 to $74.
In order to improve their financial health, 50 percent of respondents in the second survey have increased the funds in their savings accounts, 45 percent paid down debt and 45 percent have been able to invest their money. Fortunately, 34 percent of people were able to increase their income in the last year.
There is a sense of optimism in the air for 2021. Half of the participants say they are in good financial standing, with two-thirds saying a goal for this year is to save more. Many were in a fortunate state when the stimulus checks came in. 31 percent were able to put the stimulus money into their savings, one percent generously donated the money, and 19 percent put their funds into the stock market. This leads us to a trend TCU saw within the younger generation: Investing with No-Fee Trading Apps.
In separate data from Market Insider, 25 to 34-year-olds planned to invest half their stimulus checks into the stock market. The rise of no-fee trading apps such as Robinhood, combined with a year of sheltering in place, has fueled the trend. TCU noted that many are new to the experience—57 percent surveyed say they started investing using these apps within the last year.
The top three trading apps were Robinhood, E-trade, WeBull, and Fidelity. 80 percent of people who invested using the apps described themselves as feeling “empowered.” 56 percent admit to checking their investments daily.
“While we always advise consumers to invest their money under the formal guidance of professional, experienced financial advisors, we’re aware of this cultural shift in retail trading and we’re curious to investigate the trend,” says TCU in the statement.
A majority of the people surveyed said they did not learn personal finance growing up, so they’ve steered towards both traditional and social media to learn. The top three resources mentioned were Dave Ramsey, Suze Orman, and Jim Cramer.
70 percent had gone to social media site Reddit to learn about stock market tips. Reddit is the origin of many “meme stocks” or “stonks.” Both terms refer to stocks with bad financials, but the hype from early-buyers plus FOMO (Fear Of Missing Out) drives the share price high. A great example is in January when an army of retail traders coordinating on Reddit’s WallStreetBets forum wrangled with short-focused hedge funds and pushed their favorite stocks such as GameStop (GME) and AMC Theatres (AMC) higher. There was recently a congressional hearing on the issue.
After delivering these results, Travis Credit Union says “of course, in our experience, if you’re looking for safe, reliable, long-term savings and financial wellness, nothing beats having a true professional at your side.”
If you’re interested in professional financial advice, you can contact Travis Credit Union or your local Chamber of Commerce for a list.