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Financial Optimism Rises Among Middle Income Households

Nearly three-quarters believe they are on the right track to achieve financial prosperity

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  • Written by  Banking Exchange staff
 
 
Financial Optimism Rises Among Middle Income Households

Middle-income households are becoming more optimistic about their financial situation as 74% believe they are on the right track toward financial prosperity, according to Santander US.

The Paths to Prosperity survey for the first quarter of 2024 found that although inflation remains a top concern for middle-income households, these concerns are easing.

Nearly half (46%) reported inflation was a top concern, which was a drop from 57% of consumers in Q2 of 2023. Concerns of a recession in the next 12 months have also decreased from 69% to 60%.

Even though inflation remains a concern, 45% of middle-income households said they are better equipped to handle increased prices.

To adjust for inflation concerns, 67% have already made cuts to their household budgets, forgoing major purchases such as vacations, vehicles and home repairs.

Many households also plan to use their tax refunds to help their financial situation — 60% expect to receive a tax refund for their 2023 filing and 42% said they plan to apply it toward debt or save it.

Tim Wennes, CEO of Santander US, said:  “While middle-income households have had to navigate higher prices due to inflation, it is encouraging to see consumers taking positive steps to manage their finances and adjust their household budgets.”

According to Santander US, many consumers are continuing to miss out on the opportunity to leverage the current rate environment to grow their savings, which could improve their finances.

The report found that six in 10 middle-income consumers have not moved their money to earn higher yields on their saving, and more than one in four do not know their current rate.

Of those who know what their current rate is, 56% of consumers are earning less than 3%.

Wennes added: “For most consumers, this is the first time in a generation when they can be earning meaningful interest on their hard-earned savings.”

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