Financial stress is so severe that many Americans avoid looking at their financial situation. This is especially true among 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 out reasons for financial stress and addressing them in manageable steps can help. Suggested steps include building a budget, reviewing expenses, and planning for unexpected costs.
Inflation, expenses, the economy, and income are the main drivers of financial stress in 2024. Over half of Americans say high inflation contributes to their stress, a trend consistent since 2023. Stress related to everyday expenses, the economy, and income remain higher than in 2021.
Debt also contributes to financial stress, with 30% of Americans citing it as a cause. Among those with debt, 84% have credit card debt, and 55% have medical or home loan debt. Most respondents have been in debt at some point, and 55% prioritize paying it off quickly.
Nickele suggests that creating and sticking to a debt repayment plan can provide peace of mind and open new financial opportunities.
The survey also found that many Americans do not feel financially prepared for significant life events. Most feel unprepared for losing their job (64%), taking on caregiver expenses (63%), or handling unexpected expenses over $5,000 (60%).
Misconceptions about managing debt vary across generations. About 31% of Americans feel they will never get out of debt, 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 across generations may not be aware of financial tools to help manage debt and unexpected expenses. Debt consolidation loans, for instance, can combine multiple higher-rate balances into a single fixed-rate loan with a set monthly payment.
The survey also highlights that reasons for avoiding personal loans differ by generation. High fees deter 33% of Millennials and 32% of Gen X, while 22% of Gen Z avoid loans due to not understanding the application process.
Olson encourages consumers to research to find personal loan products tailored to their needs, looking for competitive interest rates, no fees, and flexible repayment terms. She also recommends choosing lenders with a strong history of good customer service.
Discover Personal Loans offers resources to help consumers manage debt and finance major expenses. Tools like a personal loan calculator and a debt consolidation calculator can assist in finding suitable loan terms and potential savings.
Image: Discover
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