Survey Uncovers 3 Key Ways to Improve Your Financial Habits
MIN READ 5
The lasting effects of COVID-19 have disrupted our daily lives, but as case counts start to drop and vaccination rates soar, society is finally beginning to look ahead to life after the pandemic. Last year, we investigated COVID’s effects on personal finances, revealing the alarming impact of the pandemic across three generations. Now, a new survey investigates current trends in our financial management habits, revealing the most important changes we need to make to bolster our financial position as we transition into the post-COVID era.
We don’t need more time, we just need to spend it doing what matters
The survey asked respondents to rank the importance of various everyday activities, such as financial management, chores, and working out, as well as how much time they spend on each one. The results are telling — there’s a large gap between the importance of activities and the amount of time we spend on them.
While people consider managing finances to be the most important activity of the 8 options presented, it’s also the activity on which we spend the least amount of time. Other activities that rank lower receive a lot more attention. Social media, for example, is considered the least important activity, but respondents spend the third most amount of time on it.
Given the gaps between the level of importance and the actual time spent, we calculated the disconnects between the two. The following activities are ranked from the largest to smallest gap between how important the activity is and how much time we actually spend on it:
- Working out
- Social life
- Household chores
- Watching TV
- Social media
“Social life” is the only activity for which the level of importance seems to match the time spent. For each of the activities above that line—finances, working out, and appearance—we don’t spend nearly as much time as their importance seems to warrant, with personal finances exhibiting the worst gap of the three.
Why we don’t spend more time on our finances
When asked why they don’t spend more time managing their finances, respondents offered 3 main reasons, all of which could easily be reinforcing each other:
- Anxiety: 37% of respondents said they don’t spend more time managing their finances because it gives them anxiety.
- Lack of financial education: More than a quarter (27%) feel their formal education did not prepare them well or at all to manage their finances.
- It’s not an enjoyable task: 22% said they don’t spend more time managing their finances because they simply don’t enjoy doing it.
If these are the primary roadblocks to better financial management in a post-pandemic world, all 3 raise an obvious question — what would make financial management easier and less stressful?
3 Key Ways to Boost Your Financial Habits
Based on feedback from our respondents, 3 simple things can make the difference between keeping up with your personal finances and falling into the gap:
1: Implement a system and develop habits that work for you
Individuals should develop a financial management routine that best suits their lifestyle, whatever that might mean. After all, the harder you have to work to make that routine happen, the less likely you are to stick with it.
This routine should include a plan for how frequently you’re setting aside time for your finances, as well as a system for holding yourself accountable.
For example, our survey discovered that of the respondents who check their investments at least once a day, 58% also check their bank account daily. Additionally, 38% check their credit card balances and 37% check how much they’re spending in comparison to their budget at least once a day.
It’s all about finding a system that works well for you and keeps you on track towards your financial goals.
2: Consider a budgeting app
The survey results revealed there are still major blind spots in people's knowledge of their own finances. For example, nearly half (46%) of respondents don’t know or are unsure of their net worth.
That’s despite the fact that respondents reported spending, on average, 3.3 hours per week managing their finances. In the course of a year, that’s over 170 hours, or the equivalent of an entire month of full-time work.
One solution could be spending even more time at it—respondents reported spending 5.7 hours per week on their social media accounts, for example—but more time might not be the answer.
71% of respondents who use software or an app like Quicken or Simplifi to manage their finances said they were aware of their net worth. And, thanks to automation, these solutions can cut finance management down to just minutes each week.
3: Understand the real source of financial anxiety
Interestingly, the respondents who reported feeling anxious about their finances spanned every income bracket. In other words, financial anxiety, and the resulting unwillingness to spend more time on financial management, does not seem to be tied to income level.
This counterintuitive result suggests that the stress of financial anxiety might be more about uncertainty than it is about finances themselves. The more we know about our finances, and the easier that information is to get, the less people are likely to worry.
Baby boomers, for example, were least likely (19%) to report feelings of anxiety from managing their finances compared to other age groups (51% of Gen Z, 43% of millennials and 38% of Gen X). And 61% of boomers also said that they felt no need to spend more time on their finances than they already do.
These results suggest that the confidence people feel in their financial information is more important than their income level when it comes to reducing financial anxiety.
Take Quicken’s quiz "Are You a Money Magnet?" to find out how sharp your financial management skills are.