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The 3 financial issues Americans are most worried about

Jun 23, 2022
Empower Insights

And what you can do to help ease your concerns

Money concerns never completely go away for most people. And although they can change depending on your personal circumstances and what’s going on in the world around you, there are some issues that tend to be top of mind for most people. 

Our recent Wealth & Wellness Index identified the top three issues Americans are worried will negatively affect their financial health:

  1. 85% are worried about rising inflation.
  2. 76% are worried about geopolitical issues.
  3. 74% are worried about a potential recession.

If you’re concerned about any of these things, you’re not alone. Fortunately, there are steps you can take to help ease your financial fears.

Combating inflation

To protect against inflation, it’s important to first evaluate your overall financial health.

  • Get started by creating and maintaining a budget. Are there discretionary expenses you can cut back on? As Americans deal with rising inflation, many are slashing their spending when it comes to travel, eating out and entertainment.
  • It’s also a good idea to tackle or renegotiate any debt, especially those debts that carry high interest rates. Prioritize paying down your debts that have adjustable or variable interest rates, which rise during periods of inflation.
  • When it comes to your portfolio, it may help if it’s diversified with a healthy mix of stocks and bonds. If you’re ready for new investments, consider market sectors that historically perform well during periods of inflation. Investments in this category may include value stocks or businesses that sell essential goods.

Reacting to geopolitical conflict

More than three-quarters of Americans are worried about how geopolitical issues, such as Russia’s invasion of Ukraine, will affect their finances.

  • Russia is a significant producer and exporter of crude oil, so the war has driven up fuel prices and disrupted production processes. It’s also contributed to increased costs for food items produced in Russia and Ukraine, such as wheat, barley and sunflower seed oil. If you can realistically cut back the amount you drive and switch out some of the impacted food items at the grocery store, you can minimize the effect on your financial health.
  • The war is also a contributing factor when it comes to volatility in financial markets. When markets are unstable, it’s important try to remain calm. Avoid making sudden investment decisions without first assessing your risk tolerance, time horizon, personal goals and overall financial picture. 
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Preparing for a potential recession

According to our recent Wealth and Wellness Index, 73% of Americans are preparing for a potential recession in some way. The most common actions they’re taking are:

  • Delaying major purchases.
  • Setting aside more money in short-term savings.
  • Paying off debt more aggressively.
  • Looking into alternative income streams, also known as side hustles.

All of these can be effective strategies for weathering a potential recession.

It’s also important to stick to your financial plan while finding ways to manage risk in your portfolio. Here again, diversifying your portfolio by investing in a mix of stocks and bonds can be key. Consider meeting with a financial professional to determine whether it’s time to rebalance your portfolio in light of changing circumstances. Above all, stay focused on your goals — and remember that markets have historically recovered from recessions over time.

It may seem like the world is very unpredictable right now, so remember to focus on the aspects of your financial health that you can control. Your money concerns may never totally disappear, but if you take steps to mitigate them, you can lessen your worry and continue to focus on your long-term goals. 

Data gathered from Empower, Wealth and Wellness Index Mid-Year Survey, May 2022.

Diversification does not ensure a profit or protect against loss.