In a Post-Pandemic situation, consumers are in front of urgent challenges to adopt their attitudes, behavior and habits.
According to research, COVID-19 changed consumer behavior. Consumers respond to the crisis in a variety of ways: some of them seem indifferent to the pandemic and are continuing their business as usual, while more optimistic results revealed an increase of the personal saving rate with a change from February to April from 8.2% to 33%, according to the BEA data (2020).
What is surprising though is the fact that 65% of Americans have no idea how much money they’ve spent last month and approximately a third of Americans said they wish they’d spent less during the same period of time.
A lot of Americans consider that money is a key source of stress today and consumers continue to feel the financial impact of the Covid-19 crisis. Unfortunately, American people face a multitude of challenges they need to recover from and recently, studies have shown that the actual crisis we’re facing seems to be affecting consumer’s routines and finances.
So how can you tell the difference between needs and wants? Let’s take a closer look at which characteristics, attitudes and behaviors impact positively our consumption level today.
According to the Bureau of Consumer financial Protection, consumers’ financial well being is influenced a lot by the level of perception toward financial decisions, the quality of financial knowledge, the importance of personal traits, the impact of the socio-economic environment, etc.
Additionally, the level of control of finances, the capacity to absorb a financial shock, the ability to meet financial goals and the level of financial freedom to make the choices play a key role here as well. Specifically, people able to manage day to day financial decisions are those who have a better level of financial well being.
In addition, those who can absorb a financial shock with the support of their community, friends, personal savings and others related solutions will probably bounce back sooner rather than later.
Financial ability versus knowledge, literacy and education:
Financial education also plays a major role to enhance a consumer’s capacity. A clear understanding of financial concepts and how financial products are working, allow to consumers to better manage their portfolio, budgets and further opportunities of investment. An adequate understanding of financial terminology, jargon and others related financial information should increase the consumer’s ability to improve the level of financial behavior.
According to the data, 43% of people involved in financial surveys were struggling to pay the bills, while 34% were experiencing material hardships. Financial well-being is associated with educational attainment and other related characteristics as income, employment status, etc.
More actions needed in terms of financial capability and literacy include: settling debt, credit repair, home ownership and mortgages, and student loan repayment, etc. Rethinking how to improve the level of consumer financial well-being regains more attention in the US society today according to these surveys.
Without doubt, financial education is important. The more you reconsider your financial capabilities, the more you can overcome your financial weaknesses!