It’s hard to believe it’s been nearly two years since our world was turned upside down by the COVID-19 pandemic. From work and school to socializing and hobbies, nearly every aspect of our lives has been significantly altered.
And that goes for our wallets, too. The pandemic likely offered you the opportunity to reassess your financial situation and make strategic tweaks or even big, bold moves. More people began to take charge of their finances and plan for the future — from prioritizing saving to opening investment accounts.
We’ve been taking a close look at the money-related trends that have emerged during this unique time in our lives, and these are some of our top takeaways.
Millennials are more optimistic about attaining wealth
A higher percentage of millennials now believe they are likely to become wealthy in their lifetime. They are much more optimistic than Boomers, who believe they are likely to be wealthy at about half the rate that millennials do. This upbeat attitude about wealth comes despite living through two recessions and graduating into one of them. The definition of wealth is changing as generational wealth and career freedom play a role in how millennials characterize being wealthy. More than ever, people feel empowered to achieve their personal definition of wealth. If you’re interested in building wealth, investing is one of the best tools to get started.
Looming inflation adds to consumer worry
Increasingly, inflation is keeping people up at night. In November 2021, the annual inflation rate in the United States rose to 6.8%, the highest since June 1982. Pandemic-related labor and material shortages likely mean rising prices and continued supply bottlenecks for the next couple of months.
While increased expenses at the grocery store and the gas pump may affect your monthly budget, you can take steps to help “inflation-proof” your money — such as modifying your investment strategy.
Women have become more interested in investing
One bright spot during this tumultuous time is women’s increased interest in investing. Nearly 67% of women are investing outside of retirement accounts now, up from just 44% in 2018. Half of women say they are more interested in investing since the start of the pandemic. That’s great news as women face unique financial challenges, and investing can be a crucial way to begin to close the gender wealth gap. And since women investors consistently outperform their male counterparts on average, we think this trend is long overdue.
Saving may be here to stay
With stay-at-home orders and closures, we had no choice in many of the changes brought about by the pandemic. And the circumstances led people to recalibrate their saving and spending habits. As many people shifted to WFH, they saw their money allocated to transportation and lunches out dwindle.
Without the ability to enjoy restaurants, bars and other usual forms of entertainment, many welcomed the additional cash in their wallets. A survey taken during Money, Priorities and the Pandemic session at the Ally Digital Conference last month revealed that 61% felt their money habits improved during the pandemic.
Build on your progress and ensure your smart money moves become permanent. No matter how life continues to evolve, you can benefit from improved financial habits.
Financial concerns persist
While some improved their money management, people are still worried about their financial future. One of the features of Ally Bank Online Savings Accounts are buckets, which allow our customers to divvy up their savings into different categories Over the past year, we’ve seen a 10% increase in the average balance designated for emergency funds, yet 21% of people are not confident about their current financial situation. Nearly half are worried about saving for an emergency, paying off debts or loans or saving for retirement.
Travel and entertainment made a comeback
After more than a year of stay-at-home orders and shuttered businesses, the arrival of the vaccine heralded the much-anticipated return of travel, dining out, movie theaters and live shows. In October, almost half of Americans engaged in out-of-home activities such as dining and shopping compared to just a third in February. With the ongoing rise of the Omicron variant, it remains to be seen how the situation may change going forward. One thing is for sure, interest for exploring new places and gathering with friends/family remains high.
Millennials head to the suburbs
With the rise of remote work, Our data found 21% of all consumers moved or relocated during the pandemic, and 77% of those who moved were millennials. The reason for their move? Almost a quarter cite a lower cost of living.
More than half of the American workforce have been working remotely through the pandemic. If your employment situation has changed, or you find yourself with different priorities in light of all the changes brought about by the past two years, it could be a good time to think about making the leap to home ownership, especially in light of historically low interest rates.
Use pandemic hindsight wisely
These unprecedented times have brought about new challenges, as well as opportunities. Though we can’t predict the future, we can use the events from the past two years as learning experiences to continually adjust our money management strategy going forward.
Ready to apply lessons learned and increase your financial success in the new year? Receive top market insights delivered to your inbox.
Lindsey Bell, Ally’s chief markets & money strategist, is an award-winning investment professional with a passion for personal finance and more than 17 years of Wall Street experience. Bell’s unique ability to connect the dots between data and real life and craft bite-sized money ideas that people can use and apply stems from her deep background as an analyst, researcher and portfolio manager at organizations including J.P. Morgan and Deutsche Bank. She is known for demonstrating why and how an understanding of all things money improves a person’s finances and overall well-being. An ongoing CNBC contributor, Bell empowers consumers and investors across all walks of life and frequently shares her insights with the Wall Street Journal, Barron’s, Kiplinger’s, Forbes and Business Insider. She also serves on the board of Better Investing, a non-profit focused on investment education.
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