Feeling Financially Insecure? How to Go on Offense With Your Money

Americans are feeling better about the direction of the economy—fewer people expect a recession this year compared to last. Despite that, more people say they don’t feel financially secure. Perhaps it’s not surprising, as rising inflation and incomes that aren’t keeping pace get most of the blame. The 2024 Northwestern Mutual Planning & Progress Study finds more than half of adults in the U.S. expect inflation to increase in 2024. And 52 percent say their income isn’t keeping pace.

Our financial discipline is also dropping—fast. According to the study, only 45 percent of Americans believe they’re financially disciplined. In 2020, that number was 65 percent.

“During the most acute period of the pandemic, we saw a distinct rise in financial discipline, but in the ensuing years, there’s been drift,” says Christian Mitchell, chief customer officer at Northwestern Mutual. “At a time when people are feeling unstable about their financial futures, we’re encouraging clients to prioritize planning and discipline like it was 2020 again.” 

If you’re feeling financially insecure, let's make 2024 the year that you go on offense with your money. These steps can help.

How to get on offense with your finances

1. Track and prioritize your spending

The word budget has such a negative connotation. It can feel spartan—like you have to spend less. The reality is that, depending on your situation, you may need to reduce your spending. But let’s reframe how you look at this. You’re prioritizing the spending that’s most important to you and letting things that are less important fall off. You’re saying no to some things so that you can say yes to others. You might even want to employ loud budgeting.

Ultimately, your goal is to have more coming in each month than going out. But make sure that you’re thoughtful about it so that you feel good about what you’re getting when those dollars leave.

2. Prepare for life’s twists and turns

Once you have a plan to get your spending to a good place, let’s focus another key to feeling confident about your money: being ready for life’s curveballs. Whether it’s an unexpected car repair bill or something more serious like a health scare, life can turn on a dime. While you can never fully prepare for everything, having a plan to handle them can help you feel better about your money. Consider these strategies:

3. Set aside money for future goals

Retirement is a big one, but there are lots of goals to save for: education, a new house, a wedding someday. Automate withdrawals so that you never miss this money. You’ll eventually grow the amount you need.

4. Get a financial plan

Doing all the things above is great, but a financial plan built with a trusted financial advisor can help you bring it all together. In fact, 49 percent of NM clients prioritize “playing offense” with their savings and investments, vs. 29 percent of the American population. Your advisor will get to know you and what’s important to you and can help you fine tune how you’re allocating your money. Knowing that you have the right amounts dedicated to the right things can give you confidence that you’re on the right track with your money now and in the future—even if life doesn’t go as planned.

5. Relax

The world always provides reasons to be nervous. When Americans were asked to rank the concerns that could impact their finances the most in 2024, inflation topped the list but government dysfunction and the U.S. Presidential election ranked second and third, beating out longer-term worries such as a potential recession, interest rates, market volatility and geopolitical conflicts.

“Gridlock, divergent visions and persistent threats of government shutdowns have Americans concerned about our leaders’ ability to come together and solve large problems,” said Mitchell. “Increasingly, people are concerned that they and their finances may be caught in the middle of these arguments. It will be important for investors to avoid acting emotionally and maintain a long-term view.” 

The bottom line? While it’s important to be aware of what’s going in the world, you shouldn’t let these things affect your personal financial outlook too much—especially if you’re on offense and you have a financial plan.

If you’re in need of reassurance, a Northwestern Mutual financial advisor can act like a good coach: helping you stay focused on what you can control by showing you the best options and strategy that will work for you.