It’s virtually impossible to go a day without hearing a word of financial advice. From our own families to morning shows, there is a wealth of information available. Wherever Americans are receiving financial advice, every decision has the potential to impact their lives for years to come.
During this year’s Life Insurance Awareness Month, Brooke Shields shares a major piece of financial advice she didn’t receive: the importance of protection-first financial planning and the role of life insurance. Says Shields, “This wasn’t anything I was taught growing up. It’s a lesson I learned on my own.”
This wasn’t anything I was taught growing up. It’s a lesson I learned on my own-Brooke Shields
Shields’ honest assessment drove New York Life to ask what financial advice Americans are receiving and how it’s affected their lives. To better understand this, the company surveyed more than 2,000 adults on their best – and most regrettable – financial decisions. Here are a few key takeaways:
The decade between ages 26 and 36 is critical when it comes to making big financial decisions, and impacts can have a years-long ripple effect.
|Rank||Biggest Financial Regret *||Average Age of Mistake||Average Age of Recovery||Years to Recover|
|1||I did not start saving for retirement||34||45||11|
|2||I relied too much on my credit card||36||44||8|
|3||I did not maintain an adequate emergency fund||32||41||9|
|4||I didn't pay off my credit card balance each month||35||40||5|
*Results include regrets cited by more than 200 respondents
“This data suggests Americans’ most regrettable financial decisions stack up to focusing on the near-term at the expense of the long-term,” said Brian Madgett, head of consumer education at New York Life. “Building a thoughtful budget balances these two things, allowing Americans to afford the occasional luxury without dragging down their credit score or future quality of life.”
The data also shows that it’s possible for people to recover from living beyond their means and spending more than they save. Debts can be paid off. Americans can start saving for retirement now and work to increase contributions as income grows.
Millennials have the basics down when it comes to managing their money, but there’s still room for growth.
Millennials surveyed seem to have internalized the idea that being financially responsible is the key to stability and security. The top five pieces of advice Millennials followed that led to the greatest positive financial impact serve as the bedrock of a smart financial plan:
|Rank||Advice||Percentage of Millennials who said this advice led to the greatest positive financial impact|
|1||Don’t live beyond your means||78%|
|2||Build a budget & stick to it as strictly as possible||74%|
Build an emergency fund
|4||When you get a raise at work, try to save some of it instead of building it into your lifestyle||64%|
|5||Pay off your credit card balance each month||62%|
“Though Millennials appear to be making less money than the generations before them and are saddled with more debt, their solid financial habits are on keeping them on track to be financially healthy over the long-term.”
Planning for the long-term is an area where Millennials are receiving less advice and they’re also not taking the advice as frequently as they could. For example, only 18% say they’ve been told to consult a financial advisor – and of that group, more than a quarter (28%) did not follow this advice. Just 14% say they have heard that they should invest aggressively when they’re young, and 26% have ignored that advice.
Only 18% [of millennials] say they’ve been told to consult a financial advisor.
Although Americans are living in an era of polarization, financial advice is a great unifier.
In an environment where it seems Americans have less and less in common, in stands to reason that consistent views about money would also fall victim. Moreover, Americans have access to more information about financial planning than ever, leading to a confusing and fractured environment as people try to make sense of how to thrive both now and in the future. However, the data shows that, for the most part, everyone appears to be receiving the same fundamental advice.
Here are the similarities across several of the top pieces of advice respondents have received, broken out by gender and region:
|Don’t live beyond your means||56%||55%||62%||53%||57%||50%|
|Pay off your credit card balance every month||40%||42%||43%||39%||39%||43%|
|Build an emergency fund||40%||43%||40%||41%||42%||42%|
|Build a budget & stick to it as strictly as possible||36%||36%||37%||35%||37%||37%|
The basic elements of financial advice uniting most Americans are the bedrock of a protection-first financial plan -Brian Madgett, Head of Consumer Education
“The basic elements of financial advice uniting most Americans are the bedrock of a protection-first financial plan,” said Madgett. “Throughout Life Insurance Awareness Month and beyond, seeking the guidance of a financial professional to identify and overcome financial regrets can help Americans find peace of mind and create a solid foundation for their financial futures.”
These findings are from a poll conducted by Morning Consult on behalf of New York Life from August 20-24, 2019, among a national sample of 2200 adults. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on age, race/ethnicity, gender, educational attainment and region. Results from the full survey have a margin of error of plus or minus 2 percentage points.
To view an infographic that highlights American's biggest financial regrets click here.
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