The general personal finance sentiment around the country fluctuated significantly in the past several months, and this could signal that some Americans are still not completely comfortable with their own financial strategies and standing.
Overall financial optimism fell to minus-2.6 in February, which was 6.6 points lower than the previous month’s level, according to the Finance Optimism Index completed jointly between AOL Inc. and the Consumer Bankers Association. The reason for the decline was more Americans are feeling generally uncomfortable with their own personal finances.
Despite the recent drop into negative territory, the index made significant progress in the past several months. The report showed that the figure fell all the way to minus-24 in October. However, this improved markedly in November, jumping 16 points. It again achieved another hurdle in January, as it reached plus-4, before sliding again to its current level.
“Our partnership with the CBA on the Finance Optimism Index will bring actionable insights to increase the level of financial optimism in this country,” said Paul Kadin, head of category development at AOL. “The Index will be a valuable resource for banks’ financial education and marketing initiatives.”
Young Americans worry about financial prospects
As many individuals have various concerns about their finances, young people specifically may have some work to do to improve their own financial standing and education. According to a report from the Financial Industry Regulatory Authority, less than one-quarter of millennials polled were able to correctly answer at least four questions in a five-question test about financial literacy. When examining the youngest of the group, just 18 percent accomplished this task.
With this in mind, many millennials are concerned that they are not getting their finances in order. More than 45 percent of those polled noted that they are saddled with a high level of debt, the report explained. Just 38 percent of baby boomers and less than one-quarter of the silent generation said the same.
Another 43 percent of millennials said that they used various financial borrowing through non-bank channels in the past year, despite the high risks of working with companies like pay day lenders. Just 21 percent of baby boomers noted that they also looked to borrow money from these types of channels, while less than 10 percent of those in the silent generation explained they did this, as well.