9 min read

Financial concerns are a frequent facet of everyday life. Financial stress affects millions of families across the country. The economic impact of the global health pandemic triggered by COVID-19 has only compounded these concerns for millions of Americans.

These anxieties are rooted in managing costs, dealing with unexpected expenses, and trying to create financial health for the future. Even in the pre-pandemic economy of 2019, roughly 37% of households struggled to cover an emergency $400 expense. Beyond immediate costs, many fret about future risks and goals, such as affording emergency medical care and saving for retirement.

These widespread money worries raise important questions: How do Americans define financial stability in their own lives? What helps people feel economically secure during these uncertain times, and how are they trying to improve their financial health?

We put these questions to 1,004 individuals, asking them to describe financial stability in their own terms. Our results show how many of respondents have felt less financially stable due to COVID and generally feel unsteady about their spending, debt and savings. For an intimate look at financial well-being, keep reading.

Financial stability: definitions and aspirations

A thriving economy doesn’t necessarily mean that all Americans live in prosperity. In fact, fewer than 1 in 3 Americans are financially healthy, according to the 2019 U.S. Financial Health Pulse report. While each generation views personal financial stability somewhat differently, there is common ground. 26% of respondents said they felt financially secure when they could add to their savings. But, in 2020, this average jumped to 34%.

Most respondents admitted they don’t feel financially stable: Just 18% described themselves as “very” or “extremely” financially secure. Baby boomers were the most likely to regard their financial circumstances positively. One in four Gen Xers, by contrast, said they were not at all financially stable.

In contrast to the end of 2019, more respondents (44%) reported feeling less financially stable, compared to 35% who felt the same, and 21% who reported being more financially stable. Respondents who had been furloughed or let go from their job due to COVID-19 were the most likely to feel less personal financial stability in 2020, though 39% of people with no changes to their employment felt the same way. A shaky economy could have effects on everyone, whether they still have their jobs or not. Perhaps many who are still fortunate to have their positions are wondering if their jobs could be lost in the coming months.

Baby boomers (46%), Generation Xers (46%), and millennials (45%) were all likely to indicate feeling less financially stable in 2020 than in 2019. This suggests that no one is immune to financial anxiety, especially in a difficult pandemic economy. Within our survey, we found that 38% of baby boomers, 27% of Gen Xers, and 33% of millennials were furloughed or let go due to COVID-19. These changes in employment and a steady source of income could impact how comfortable people are feeling with their financial situations.

Even small financial surprises can be difficult to navigate for many. Even in 2019, roughly 37% of American households didn’t have the cash to cover an emergency expense of $400 or more. So, when major unexpected costs come up, many people need to borrow funds.

Over a third of respondents reported borrowing $5,000 or more in a time of need, most often obtaining loans from a family member. These needs could include car repairs, unexpected medical bills, or suddenly losing a job. Any of these surprise financial situations can set someone back.

Baby boomers were somewhat more cautious about debt than younger individuals, feeling most comfortable when they carried less than $5,000 in debt, on average (outside of their mortgages). Because so many millennials and Gen Xers have funded their education through student loans, these generations may be more accustomed to higher debt totals.  However, that doesn’t mean they’re comfortable with excessive borrowing. Regardless of age, money is still the leading point of stress for Americans, particularly as many define financial stability as having money left over each month to put toward savings.

The impact of COVID-19 made it difficult for some Americans to afford basic necessities. More than 1 in 3 respondents acknowledged having to borrow money at some point in the six months prior to this survey in order to cover their needed expenses and bills. Millennials might be having the hardest time making ends meet, with 41% reporting having to borrow money to pay for essentials. By comparison, 36% of baby boomers and 26% of GenX Americans relied on financial loans at some point in the first half of 2020 as well.

Among those who had to borrow money to pay for essential expenses and bills, the average amount was just over $2,900. Forty-nine percent of people borrowed the money from their parents, followed by those who took loans from friends (39%), siblings (24%), and banks (23%).

Consumers believe borrowing can improve financial stability

Discover’s own recent research [polling Discover Personal Loan customers only], shows that 88% of surveyed customers told us taking out a Discover personal loan for debt consolidation helped improve their financial future.*

In our survey, 73% of Americans also felt their most recent borrowing activity was a smart choice to bridge a financial gap. With so many Americans feeling a lack of control when it comes to their financial lives, thoughtful borrowing can put them back in the driver’s seat.

Being able to pay bills on time is a hallmark of how many Americans gauge financial stability; utilizing personal loans to pay for unexpected expenses and existing obligations can provide a real sense of security. 

Similarly, 83% said borrowing money allowed them to accomplish a goal. These goals could refer to personal expenses, such as buying a car or funding a wedding. But they might also be savvy financial objectives, such as using a personal loan to pay off high-interest credit card debt. Likewise, 70% said they were able to pay off their latest loan in a manageable time frame. In fact, certain kinds of personal loans can help you pay off existing debt more quickly, saving hundreds of dollars in interest or more in the process.

Budgeting and Financial Stability

For many young adults, creating a budget is a key step in developing financial responsibility, enabling prudent spending and saving habits. Budgeting is crucial to finding financial stability; Regardless of generation, the sooner you assess your income and expenses, the sooner you can make progress toward your financial goals.

In fact, many respondents expressed regret that they hadn’t paid more attention to budgeting in the past. Among people who identified as “not at all” financially stable, three-quarters believe they would be more financially stable if they’d been more mindful of budgeting earlier in life. Perhaps for many young people, the advantages of budgeting and saving are not immediately clear. As we grow older, we discover plenty more reasons to put money away, from starting a new business to saving for a child’s college fund.

Retirement saving roadblocks

For many Americans, the prospect of retiring prompts considerable anxiety: Nearly half of working people worry they’ll run out of money in retirement. Unfortunately, recent research suggests their concerns may be justified, with many U.S. adults saving too little to retire comfortably.

Among our respondents, more than a third said they are not actively saving for retirement. Even among those who were currently saving, more than 7 in 10 wished they’d started doing so sooner. Financial experts recommend starting as soon as possible, even if you can only afford to contribute a small amount to your retirement account. By starting early, you can enjoy the benefits of compounding interest in the long run.

If you’ve struggled to save for retirement so far, it’s a smart move to get started. Even if you feel you’re far behind, it’s possible to recover and build a solid financial outlook for your future.

Short-term help, long-term stability

As our findings make quite clear, most Americans don’t define financial security in extravagant terms.  Financial stability can mean different things depending on generation and income level, indicating there’s not just one way to approach building healthy finances. Rather, people tend to aspire to modest progress, such as paying the bills and gradually growing their savings. These goals are admirable and attainable, although you may have to think strategically about your spending and saving habits.

Indeed, many respondents wished they’d made smart choices sooner, starting their retirement savings at a younger age. You might take note of their experiences to improve your own financial well-being for the present and in the future. Get the ball rolling with some simple, constructive steps, such as managing your debt or learning about your options for retirement savings. Monitoring your finances closely and planning for your future can provide peace of mind and help you feel more prepared for your financial future.

Unexpected changes in the economy can leave people feeling unequipped to handle what’s coming their way. In these circumstances, we found the majority of our respondents who borrowed money achieved a goal and repaid their loans in a reasonable time frame. Borrowing money doesn’t mean you are less financially stable. If you’re looking to find similar success, we’d be happy to help. Short-term borrowing can be a strong strategy to achieve long-term financial goals. Discover Personal Loans has unique tools and benefits that can help you create financial well-being.

Want to learn more about how personal loans can help you? Read What is a Personal Loan.Read What Is a Personal Loan

Methodology and Limitations

To execute this study, we surveyed 1,004 people on the Amazon Mechanical Turk platform. Everyone was qualified to take this survey. If respondents failed an attention-check question located roughly halfway through our survey, they were disqualified and their results were excluded.

The age range definitions for the generations we examined in this campaign are as follows:

Baby Boomers (born 1946 to 1964)

Generation X (born 1965 to 1980)

Millennials (born 1981 to 1997)

The sample size for the generations we studied are as follows:

Baby Boomers: 190

Generation X: 402

Millennials: 412

Responses were weighted by state and gender using population data from the U.S. Census Bureau to make the data better reflect the demographic composition of the country. Outliers across our data were removed. Outliers were considered the top and bottom five percentiles of our respondents’ answers.

The data in this study rely on self-reported data. Several limitations come with this sort of data, including telescoping, exaggeration and selective memory. We can’t be sure how closely these data match up with reality.

*Discover Personal Loan research:

All figures are from an online customer survey conducted August 19 to September 6, 2022. A total of 665 Discover personal loan debt consolidation customers were interviewed about their most recent Discover personal loan. All results @ a 95% confidence level. Respondents opened their personal loan between January and June 2022 for the purpose of consolidating debt. Agree includes respondents who ‘Somewhat Agree’ and ‘Strongly Agree’.


Fair Use Statement

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