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How people tackle their finances can vary but, according to new research from PYMNTS, there are two ways that are most common.
PYMNTS found just 40% of American consumers are “planners,” meaning their strategy for money had more foresight.
That figure has gone down compared to the roughly half who tackled their personal finances that way in February of last year, according to the outlet.
A couple reviews their finances inside their home. (iStock)
Meanwhile, for 60% of consumers, financial matters are dealt with as they come, earning them the moniker “reactors,” PYMNTS reported.
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For the former, they tended to have at least $2,500 saved and keep their credit card balances below $2,000 on average, as well as make regular payments on their balances, according to the outlet.
The latter typically amassed higher balances and had lower amounts of savings, per PYMNTS. They also reported taking care of their credit card balances less frequently.
The drop in “planners” could mean consumers are feeling more pain in their wallets, according to PYMNTS.
The two groups typically had different priorities when it came to money, with retirement being front of mind for many so-called “planners” and knocking down debt being a focus for “reactors,” per the outlet.
A person puts money into a retirement savings jar. (iStock)
A separate report released earlier this month by Fidelity Investments found the average 401(k) account balance in the first quarter was $127,100, while the balances for IRA and 403(b) accounts averaged $121,983 and $115,424, respectively.
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Northwestern Mutual found in mid-April that Americans think they need $1.26 million saved to retire “comfortably.”
PYMNTS reported that nearly one-third of financially-reactive consumers reportedly identified reducing their debt as a top priority.
Americans collectively had $18.2 trillion in debt as of the first quarter of the year, according to the Federal Reserve Bank of New York.
For the other type of consumer, investments and savings accounted for 12% of what they financially allocated for themselves on a monthly basis, PYMNTS also reported.
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Additionally, the survey shed light on how different generations stacked up in terms of how they tackled finances, according to the outlet.
For Generation Z, 73% of those within that age group were considered “reactors,” it said.
Members of the Baby Boomer generation, meanwhile, were more likely to be “planners,” with the survey pegging the share in that generation at 54%.
Couple working on their finances (iStock)
When it comes to income, more of those taking home big bucks have started seeing themselves as “reactors” as inflation and other factors weigh on them.
Approximately 52% of high-income consumers labeled themselves as “reactors” in the survey.
The proportion of earners characterized as “planners” posted a 25% drop between February of last year and January of this year, according to PYMNTS.
The real median income for American households was over $80,600 in 2023, according to the latest data from the U.S. Census Bureau.
