29% of Americans Say They’re in Worse Financial Shape Than They Were a Year Ago. This Could Be the Reason

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Are you in a similar boat? 

It’s natural to feel down about the state of your finances every so often. Negative feelings can especially arise toward the end of a calendar year when you’ve realized you haven’t achieved the financial goals you set 12 months ago.

Meanwhile, if you feel like you’re worse off financially right now than you were a year ago, you’re in good company. A good 29% of Americans feel that way, according to a recent survey by Allianz Life.

And the worst part? The reasons for your financial insecurity may be completely outside your control. Here are a couple of factors that explain why Americans may be so down on their finances.

1. Inflation

Inflation has been battering consumers since mid-2021. If you’ve spent the past 12 months adding to a credit card balance in an effort to feed your family and cover your essential bills, then it’s easy to see why you might consider yourself worse off financially now than a year ago.

Now the good news is that inflation levels are starting to cool. In fact, the Consumer Price Index, which measures changes in the cost of consumer goods, has been declining steadily since the summertime. But we might still be in for a number of months of much higher than average inflation, which means consumers may not get real relief for a while.

If you want to stop adding to your debt pile, it may be time to consider boosting your income with a second job. That way, you can tackle your bills more easily and maybe even pay down the debt you’ve recently racked up. Thankfully, despite recession warnings, the gig economy is booming, so there’s plenty of opportunity to find work to do on top of your main job.

2. An underperforming stock market

The stock market has had an unquestionably tough year, and a lot of people are now looking at lower IRA and brokerage account balances than they were at the end of 2021. You may be one of them, but in that case, do try to remember that investing is a marathon, not a sprint.

If you’re not anywhere close to retirement and you weren’t planning to cash out your investments anytime soon, try not to let a lower portfolio balance mess with your head. There’s a good chance that in time, the market will recover.

In fact, now’s actually a pretty good time to invest if you have any extra money to spare. That may not be the case due to inflation, but if you happen to be sitting on some free cash, putting it into the market while stocks are down could be a savvy move.

It’s easy to see why so many people have a negative financial outlook these days and feel worse off than they did 12 months ago. But do try to remember that in time, inflation should ease and the stock market should regain the value it shed this year. If you can stay positive, it might be easier to navigate these challenging times.

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