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Poet Percy Green once wrote that “a man of words and not of deeds is like a garden full of weeds.” There are probably some literature professors that would debate the following summation, but a simple way of explaining Green’s lines is that it’s better to take action than simply talk about.
You know, don’t talk about it, be about it. Green’s wisdom is highly relevant in the world of finance, particularly for retail investors, those attempting to establish and stick to budgets, penny pinchers, those looking to reduce debt and more. In all of those situations and myriad other financial scenarios, talk is cheap, but action is free and effective.
Even with all of the above seemingly obvious, many people don’t take action. Reasons vary from person-to-person, but one of the big stumbling blocks to achieving individual financial success or alleviating related burdens is apt to surprise advisors: fear.
Said another way, many Americans are aware they have one, two or more financial concerns or problems, but they’re not taking action to ameliorate those woes. Advisors are just the people to help eliminate those fears and help clients action.
Financial Fears Linger, But They Can Be Vanquished
Thrivent's new Financial Fitness Survey highlights some of the concerns and fears Americans have when it comes to money. The takeaway is clear: action is needed and it’s needed now.
“The survey found more than half of Americans (53%) are very or somewhat worried about their ability to retire when they want. Yet just 28% of Americans say they are currently saving for retirement,” according to the study. “Similarly, 48% of Americans are concerned about their debt, yet just 36% are planning to prioritize paying off their debt this year.”
Perhaps surprising to advisors is the point that it’s younger people that are most unlikely to be confident about their situations and that lack of confidence can breed inaction.
“A lack of financial confidence could be the reason for inaction, and it is worst among the youngest generation. Gen Z (21%) are the least likely to report they are very confident managing their finances compared to Millennials (26%), Gen X (29%), and Baby Boomers (38%),” adds Thrivent.
Tips for Thwarting Financial Fear
Where there’s a will, there’s a way and the way to beating back financial feat is having the will to take action now. Advisors play a prominent role in that quest because involves planning. That includes a traditional, long-term financial plan and encouragement and resources to empower clients on their financial education journeys.
Retirement planning also needs to be part of the equation because it’s one of the issues clients and workers are most daunted by. Among younger people, many are looking at their luxury of time the wrong way, thinking they can delay saving for retirement rather than putting the power of time on their side today.
“The best time to start saving for retirement may have been 10 years ago, but the second-best time is today. People can work with a financial advisor to automate retirement contributions, take advantage of an employer-sponsored match, and find ways to unlock more savings through better planning,” concludes Thrivent. “It's important to start saving as soon as possible to take advantage of a longer time horizon and the power of compound interest.”