While public health has been the issue at the forefront of the COVID-19 pandemic, it has had ramifications across all aspects of life. Job losses and economic strife have led to a large decline in consumer activity, with many people choosing to prioritize long-term financial health over non-essential expenses. Vaccinations offer hope for a semblance of normalcy going forward, but some new habits may hold for the long term. To find out seven things you need to know about consumers and their personal finances in 2021, read along below.
Over 40% of American consumers say that they’ve been actively reducing non-essential expenditures in the last six months. While some of that is linked to economic hardship or a lack of things to do under health restrictions, it may lead to a long-term attitude shift. Three in five consumers say that they will cut back on non-essential purchases in the future, signaling a real change in outlook on spending.
In terms of the ways consumers pay, contactless payments continue to gain more and more traction. Nearly 45% of consumers say they use contactless payment wherever possible, while only 30% say they prefer to use cash. Among contactless solutions, PayPal continues to lead the market. Thirty-nine percent of Americans use PayPal, while Apple Pay (8%), Google Wallet (6%) and fingerprint ID on banking apps (5%) follow behind.
While Americans are displaying an openness to new ways of paying, that openness does not translate to the subject of financial risk. Only a quarter of Americans say that they don’t mind taking risks with their money, while two-thirds disagree. Some of that risk aversion may be due to the prevalence of fraud and scams in the United States. Over 45% of American consumers said that they’ve been a victim of fraud or scam — an amount that easily surpasses global peers in Great Britain and Germany.
When asked to identify their top three priorities in terms of personal finances, Americans were most concerned about meeting regular financial commitments (42%), saving money for unexpected hardship (39%), paying off debts (39%), and ensuring their families are protected in case of emergency (31%). Paying off debts, in particular, is a more pressing issue in the United States compared to the rest of the globe (25%).
One of the most notable financial stories in recent months surrounded the GameStop stock frenzy — fueled in part by Reddit’s WallStreetBets community. While the story itself is nuanced, it was made possible by new investment platforms that have made it easier for the average consumer to get involved in the stock market. In spite of that, making money through investing is a top financial priority for less than 10% of Americans.
Of those who consider investing a top three priority, three in four currently have money invested in an individual stock or a mutual fund. That’s a stark contrast compared to the 40% of the entire population that is investing. Those who do prioritize investing are inherently more optimistic about their financial future; over 40% expect their finances to be better a year from now — compared to about 25% for the general population.
While priority investors provide an appealing audience for brands in the financial services sector, it’s important to understand what products they use and where they can be reached. In terms of the investments they make, over half own a savings account, followed by common stock (42%), mutual funds (40%), and ETFs (33%). In terms of marketing, they are most receptive to online advertisements. While they under-index for use of Facebook compared to the national population, they are more likely to be found on Twitter, Instagram, and LinkedIn.
Is your brand looking to connect with consumers and help them achieve their financial goals in the coming year? Contact us today to learn how we can help by creating brand experiences that educate, encourage trial, and earn lifelong loyalists.
Source: “Global Banking and Finance Report 2021.” YouGov (2021).