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Follow These 2 Financial Strategies for a Better 2021
Can this holiday season save nine months of pandemic hardship? Well, maybe if you have a financial strategy. Thrivent’s Holiday and 2021 Outlook Report found that 40% of people with a financial strategy are feeling excited about 2021 and 21% with a strategy are more excited than usual about the holidays. Overall, the Thrivent survey results conclude that having a financial strategy increases consumer confidence, enthusiasm and charitable giving.
Key takeaways from the survey:
- In 2020, 39% of respondents plan to spend less on gifts than they did in 2019
- 44% of respondents felt less excited about this holiday season
- Those with a financial strategy, 21%, said they donated more to charity in 2020 than in 2019.
- Only 19% of survey respondents are feeling more optimistic about their finances in 2021 than they did this time last year – 40% are feeling less optimistic
- 67% of adults said they felt more “anxious” than “excited” about their financial outlook in the New Year.
Our own survey of consumers on their spending plans found that 90% of people plan on spending less on the holidays. Though 22% of our survey respondents said they felt pressure to spend more on gifts despite the economic hardship caused by Covid-19.
We spoke with Patrick Egan, the director of financial guidance at Thrivent, about the survey and his advice for consumers who want to build a stronger financial strategy.
Do you have any advice for improving holiday enthusiasm and shopping smarter this season?
Be grateful. Even in a difficult year like 2020, finding the simplest things to be grateful for can improve holiday enthusiasm. When it comes to shopping smarter, we suggest establishing a budget and sticking to it. This will help ensure you don’t unintentionally sacrifice your long-term goals for a short-term splurge. Supporting small or local businesses can have a big impact this year.
Make a list of people you want to give to and then brainstorm gift ideas. And don’t forget homemade gifts. In a year where we’ve all had less human connection, homemade gifts from the heart can be especially meaningful this year.
Practice generosity. This year has been tough, and many are struggling financially this holiday season. Giving a gift or making a donation is a wonderful way to make a difference while also improving your holiday enthusiasm.
What kind of financial strategy should people be building during this time?
Financial strategies can come in many shapes and forms — the important thing is that they’re personalized. A financial strategy should take into account your values and beliefs and your short-term and long-term goals. We recommend that financial strategies consider emergency savings, debt management, financial risk management, retirement savings, and charitable giving.
What guidance do you have for people who don’t have a financial strategy?
For someone who doesn’t have a financial strategy, our recommendation is to get started. Take a personal financial inventory to get an idea of your situation, and think about your short- and long-term goals. And people don’t have to go at it alone; talk to someone you trust – whether a family member, a friend or a financial professional. It’s a great way to understand how you can use your financial strategy to live a more meaningful life.
What are ways consumers can improve their optimism and set their finances up for success in 2021?
First, it’s important to take a step back and realize the pandemic has been a primary driver of so much of the uncertainty we’re experiencing this year. Once we get solutions to that, things could brighten up fast.
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Second, to set your finances up for success in 2021, take an audit of your finances and revisit your personal strategy. Some specific actions include consolidating retirement accounts, getting an asset allocation check-up, and understanding the impact of the low interest rate environment on personal finances.
Thrivent is a Fortune 500 diversified financial services organization. The Thrivent’s Holiday and 2021 Outlook Report was conducted in partnership with data intelligence company Morning Consult and polled 2,200 adults across the country Nov. 10-12.
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