Financial stress is so bad that many Americans avoid looking at their financial situation. This is especially true of Gen Z, with 41% avoiding checking their bank balances, compared to 27% of Millennials and 20% of Gen X.
Dan Nickele, vice president of Discover Personal Loans, advises that writing down the reasons for your financial stress and addressing them with manageable steps can help. Suggested steps include creating a budget, reviewing expenses, and planning for unexpected expenses.
Inflation, costs, the economy, and income are the main causes of financial stress in 2024. More than half of Americans say inflation contributes to their depression, a trend that has remained consistent since 2023. Stress related to daily expenses, economy, and income is always high. than in 2021.
Debt also contributes to financial stress, with 30% of Americans citing it as a cause. Of those with debt, 84% have credit card debt, and 55% have medical or mortgage debt. The majority of respondents have been in debt at some point, and 55% prioritized paying it off quickly.
Nickele suggests that creating and sticking to a debt repayment plan can provide peace of mind and open up new financial opportunities.
The survey also found that many Americans do not feel financially prepared for major life events. Many feel unprepared to lose a job (64%), take on caregiver expenses (63%), or handle unexpected expenses of more than $5,000 (60%).
Misconceptions about debt management vary from generation to generation. About 31% of Americans feel they will never get out of debt again, a sentiment shared by 36% of Gen Z, 39% of Millennials, and 34% of Gen X.
Rachael Olson, director of product strategy at Discover Personal Loans, notes that consumers of all generations may not be familiar with financial tools to help manage debt and unexpected expenses. Credit consolidation loans, for example, can consolidate multiple high-rate balances into a loan with a fixed amount and a fixed monthly payment.
Research also reveals that the reasons for avoiding personal loans vary by generation. High fees deter 33% of Millennials and 32% of Gen X, while 22% of Gen Z avoid getting a loan because they don’t understand the application process.
Olson encourages consumers to research personal loan products that fit their needs, look for competitive interest rates, no fees, and flexible payment terms. He also recommends choosing lenders with a strong track record of good customer service.
Discover Personal Loans offers services to help consumers manage debt and finance capital expenditures. Tools like the personal loan calculator and credit consolidation calculator can help find the right loan terms and potential savings.
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