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Americans struggle with finances, increasingly turn to family, friends, prayer rather than financial professionals

Nationwide Retirement Institute ® research finds Gen Z is feeling the biggest impact of inflation on their family finances

Inflation hits hardest for those who can least afford it: middle- and lower-income Americans are struggling with the rising cost of everyday needs like food, household goods and transportation. These families are also more likely to forgo seeking financial advice from a professional because they fear they can’t afford it, a move which could actually compound their problems if they don’t properly manage their finances.

New research from Nationwide Retirement Institute finds that the majority of U.S. parents (60%) cite inflation or rising living costs among their top financial concerns looking ahead at the next 12 months and a full 88% expecting an overall economic downturn in the next year. Less than half of parents (45%) have a positive perception of their family’s financial situation; nearly four in five say inflation and rising prices will influence their vote in the 2022 mid-term elections.

Only about half of U.S. parents feel confident they will be able to save enough for retirement or their children’s education, and only 48% say they are on track to meet their financial goals. While parents overwhelmingly want support with their family’s finances, more are turning to family and friends (56%) and prayer (29%) than a professional (27%) for financial advice. This is a reversal of previous trends Nationwide has seen, when more Americans said they were working with or planning to work with a financial professional.  

With the cost of living high and fear of a recession looming, parents’ confidence in their family’s financial situation is waning,” said Kristi Rodriguez, senior vice president of Nationwide Retirement Institute. “It’s understandable that families are looking for comfort during this difficult time, whether with friends and family or through their faith, but one of the most important steps they can take is to connect with a financial professional and create a plan.”

Parents are making major lifestyle changes to offset inflation
In response to inflation pressures, U.S. parents are pulling back on discretionary spending by:

  • Dining out less often (48%)
  • Reducing how much they drive (41%)
  • Purchasing different or cheaper items than they typically would (41%)

They are also relying more on credit to pay for items, with one in four (23%) reporting they have accumulated additional credit card debt and another 16% saying they’ve used ‘buy now, pay later’ apps or services in response to inflation. Again, adding debt as interest rates rise could end up making their situation worse. 

The study also found that inflation is hitting young families hardest. Parents in Generation Z – those born between 1997 and 2012 –  are leaning on safety nets. Twenty one percent received food or household goods from a food bank and 14% have moved in with family members in the past year. About three in four Gen Z parents (74%) report that they live paycheck to paycheck most of the time and nearly a third (29%) rate their family’s financial situation as ‘poor’ — almost double the average for U.S. parents overall.

Parents are also looking to their employers for improved benefits to help balance work and childcare. Nearly half of parents (48%) want to see increased flexibility in work hours, and more than a third (39%) want improved health insurance benefits. Nearly a quarter (23%) of parents want improved parental leave policies.

Rodriguez said financial professionals can help families with planning and other financial decisions such as maximizing workplace benefits. “Financial professionals are not just for the wealthy; you can find one who will understand your unique needs and your personal situation,” Rodriguez said.

Even those who may not be able to afford a traditional financial professional can benefit from being proactive and seeking out financial information that could help them through this tough time. “There’s more information online than ever, so you can find credible sources that can provide help,” Rodriguez said. “Just as with your health, it’s important to be proactive and seek preventative care rather than allowing things to get worse.”

For more detail on the Nationwide Family Finances survey and methodology, you may view the full report here.

This material is not a recommendation to buy or sell a financial product or to adopt an investment strategy. Investors should discuss their specific situation with their financial professional.

This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, OH. Nationwide Retirement Institute is a division of NISC.

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