We Live “Double Lives” When It Comes To Money

“woman closing her eyes while leaning on glass building outdoors” by xandtor on Unsplash
“Americans are financing the public half of their double lives by borrowing from the private half”

A sobering report entitled “The Secret Financial Lives Of Americans” details the areas where American’s need the most financial advice, and why they are not getting that advice. This report involved extensive research. This report was five years in the making. The authors interviewed over 2,000 people as well as many bank executives, shopping addicts, and even a bank robber! Needless to say, this report goes deep and its results are both scary and informative for both average Americans and the Financial Services Industry.

Faking It But Not Making It

In the era of social media, we are all a little guilty of posting pictures videos that show us in the best light possible. People do not like to admit that they are struggling, so they put on a glamorous front to their friends, family and the world that give the impression that they doing incredibly well financially, even when that could not be further from the truth. This is particularly prevalent in younger generations with 28% of millennials admitting that they intentionally try and make themselves look wealthier than they really are through social media. I would wager there is a much higher number that won’t admit it, but do the exact same thing.

If we peel back the social media layer and look at reality, we find that American households are in a financial mess and it is weighing heavily on their mental wellbeing. As the report phrases it: “Americans are financing the public half of their double lives by borrowing from the private half”

Some Sobering Stats

According to the report;

  • 20 million Americans have a shopping addiction.
  • Nearly twice as many Americans have credit cards (76%) as have retirement accounts (47%)
  • The state of American household saving is even worse. Forget the idea of an emergency fund to cover 3–6 months worth of expenses, 44% of Americans couldn’t handle a $400 emergency without going into further debt.
  • 52% of Americans admit to having cried because they didn’t have enough money. If you think that this is something reserved for the poor or middle class consider this:
  • 41% of those earning more than $200,000 per year have cried because they did not have enough money. This statistic may be shocking to some, but it is something I have written about in length in the past. If you can’t control your spending habits you will always be stressed out by money, no matter how much you make.
  • 37% of Americans have gone to sleep hungry because they didn’t have money.
  • 12% have stolen something.
  • 5% admit to having taken half-eaten food out of a garbage can.

The Financial Services Industry Is Failing Us

“While there are primary care physicians for the average American, there is no Personal CFO”

Longtime readers know how I feel about the current state of the financial services industry. So it comes as no surprise to me that the report finds that the financial service industry is not helping Americans in the area of their finances they most desperately need help with.

If there is a bright spot in this report, it is that Americans appear to be open to getting financial help and have even articulated eight areas that they would be willing to pay a professional to help them with. From the report;

  • Knowing if they’re paid fairly,
  • Maximizing their salary at their current job,
  • Planning career moves that earn them more money,
  • Monthly budgeting, right-sizing their debt,
  • Planning affordable vacations,
  • Having someone to talk to holistically about their financial life and;
  • Dealing with the spending pressures that status anxiety exerts.

So, first off these are topics that I will dedicate much more time to exploring. If these are the areas Americans need the most help with, I can do my small part by sharing as many tips in these areas as possible.

Sadly, the report notes that none of these eight needs are being met by the mainstream financial services industry. At least not if you have less than $100K to invest, which almost nobody does.

One of the reasons that Americans are not having their needs met in these areas is due to the silo nature of the financial services industry. Everyone is a 
“specialist”, we have mortgage brokers, accountants, investment advisors. What we don't have is an affordable, customer-centric, holistic approach to financial planning. To quote the report “While there are primary care physicians for the average American, there is no Personal CFO”

Hopefully, this will be a wake-up call to the financial services industry. You are not only vulnerable to technological distribution but also from new firms entering the industry that are willing to cater to the eight needs listed above and provide a transparent, customer-centric holistic approach to financial services. Either you can become the average American's CFO, or someone else will.

I’m curious to know what you think about the eight areas that Americans say they would be willing to pay for professional help with. Do you think you need help in these areas? If so, would you be willing to pay for it? Are there other services that you think financial advisors should be helping with? Let me know in the comments below.