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1 in 4 Americans fear becoming homeless due to financial reasons, especially young adults. How to prepare for the unexpected
1 in 4 Americans fear becoming homeless due to financial reasons, especially young adults. How to prepare for the unexpected
On a single night in 2023, the U.S. Department of Housing and Urban Development counted more than 650,000 homeless people. This is roughly equivalent to the total population of Boston or Detroit. It’s a worrying number, especially in light of another statistic: a quarter of Americans worry that financial risk cause them to become homelessaccording to a new study.
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The 2024 Acorns Financial Affairs Reportwhich interviewed 5,000 North American consumers aged 18 and over, paints a bleak picture that defies the current description of a declining economy inflation and low unemployment. Why is this? Despite this positive outlook, Americans are not feeling the effects how do they pay high rental prices and experience “contraction”while shopping at the supermarket.
The Acorns survey found that Gen Z and millennials are nearly three times more likely than older respondents to fear that their financial situation could lead to homelessness.
And while residents of big cities are more likely to feel financially secure (37%) compared to those living in less populated areas (20%), they are also much more worried about the prospect of becoming homeless (32% ) than those in the suburbs (18%).
However, dread is not necessarily a dead end. About 35% of Americans believe they will be more financially secure next year than they are today, while 44% think they will be just as secure in terms of security.
Behind and below the numbers
The Acorns study identified three top financial concerns that won’t surprise anyone who’s checked their bank balance lately: the cost of living (31%), inflation (27%), and debt (12%). Although the first two relate to fixed external factors, debt is more insidious. Many consumers have no idea how bad their situation can be. In 2022, 51% of American households had credit card debt and in 2023 were paying $126 per month in interest alone, according to the Federal Reserve Bank of St. Louis. This is money wasted.
Current events also appear to be having a pronounced effect on millennials in terms of financial well-being. This generation cited global conflict (55%), climate change (48%) and artificial intelligence (AI, 44%) as their top concerns, according to Acorns. Fear of AI may stem from potential workplace consequences. There’s even a new term for this: FOBO, or fear of obsolescence. According to World Economic ForumMore than a fifth of workers fear that machines will replace them, almost double the number recorded in 2017.
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And interestingly, the Acorns survey revealed that as purchasing power increases, so do money worries. Of those earning less than $40,000 annually, 47% cited financial security as a concern; the numbers rise to 52% for those earning between $40,000 and $74,000 and 55% for the $75,000 and above group.
Preparing for the unexpected
Beyond the sudden end of inflation or widespread grocery store price wars, financial security remains an internal task. There is a lot we can do to resolve financial concerns – which, even if well-founded, can easily spiral out of control. Here are three smart ways to regain peace of mind.
1. Create an emergency fund. As for how much you need, expenses from three to six months It’s a number you’ll see everywhere. As the name implies, this money covers unpleasant financial surprises, from medical bills to car or home damage that your insurance policies don’t cover.
2. Invest incrementally. You don’t need a lot of money to start investing – just a few bucks. Some platforms, including Acorns, can help you enter the world of investments with just the coins in your pocket. As you gain confidence, check out the various automated applications (also known as robo advisors) that take much of the intimidation and guesswork out of investing. Some apps can be set up to make small, regular withdrawals from your bank account.
3. Meet with a financial advisor. Even the smartest people go about their financial lives with a hazy sense of what the real numbers are and where the problems lie. It is true that it is complicated, as our finances cover many issues that include taxes, investments and asset protection. A solid advisor brings it all together to save you money, increase investment income – and turn vagueness into clarity.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.