The average American is worried about their finances – making small changes can help

Consumers have become increasingly stressed about their finances, despite having more tools than ever to manage their money.

Historic household debt, inflation and general economic uncertainty are making consumers more concerned about their spending habits. Money is the number one stressor for Americans, with 90% of adults indicating that their finances influence their daily stress levels.

Related: How Ordinary Americans Can Better Plan for 401(k), Retirement Income

TD Bank recently released its annual Consumer Spending Index for 2024, which reflects consumers’ growing concern about their financial health.

TheStreet sat down with Chris Fred, head of U.S. Credit Cards and Unsecured Loans at TD, to unpack the data and identify what consumers can do to take control of their financial well-being.

Consumers are worried about their finances but confident in their ability to manage them

TD’s findings highlight an interesting contradiction: 67% of consumers say some aspect of their finances keeps them up at night, but 85% feel confident in their ability to manage their finances.

Fred explains, “There’s definitely a paradox of how people can feel confident in their ability to manage their finances, but have all these stressors that keep them up at night.”

“Today’s consumers are more in tune with their finances than ever before. They’re smarter, more educated, and have more tools, but it’s hard right now,” Fred continued. “You’ve got inflation, high interest rates, student loans, retirement savings, and everyday life. There’s a lot to consider, and I think it’s exhausting trying to think of all the different ways to handle it.”

More on personal finance:

• How your mortgage is the key to early retirement
• The report on Social Security benefits confirms that big changes are coming
• The average American faces a major retirement 401(k) dilemma.

“You have to be careful and spend time looking at your expenses,” he said. “So eventually people feel like they can figure out how to make it work. But it’s still exhausting and he wonders, “How am I going to pay the bills? Should I delay this and pay this one off first? I weigh their minds.”

Current levels of inflation and debt have caused consumers to change their spending habits. Fifty percent of respondents note that food prices have risen the most of all expenses in the past year, and 42 percent report having to change their financial priorities.

Fred advises consumers to actively monitor their cash flow to prevent overspending.

“I think there are different variables at play when you’re managing your expenses in the context of your income and cash flow, but knowledge is power,” he said. “When you’re better armed with information about how you’re spending and where your money is going, you can start to adjust your strategies more effectively,” he explains. “Whether it’s streaming services, coffee, lunch or everyday expenses, they add up at the end of the month.”

A couple is seen discussing their finances with an adviser.

Shutterstock

Tips for navigating your finances during high inflation

Despite the availability of tools to help monitor and track spending, consumers find it increasingly difficult to manage competing financial obligations. Only half of respondents are actively saving for retirement, and one in five find that outstanding credit card debt is preventing them from reaching their financial goals.

Related: The average American faces a major retirement 401(k) dilemma.

Fred points out that if you have a month-to-month debt balance, you should actively shop around for the best rates. “Most people have debt and you know debt is expensive,” he said.

“If your credit score is high, shopping around for a better rate in the market could offer massive savings. By the same token, if you’re paying interest on multiple cards, paying off the card with the highest interest rate first allows the money to go a little further than it normally would,” he added.

Fred shares some tips for navigating the tough economic conditions facing consumers today. He notes that one of the best financial tips is the simplest: Small changes can compound over time.

“I believe the secret to being financially healthy is in the details; the things you don’t see often probably mean the most,” he explains. “A few dollars saved here and there over time can be significant. The power of time should never be underestimated.”

“It might require a bit of sacrifice in the short term, but it’s 365 days a year. Those daily routines count and start to add up. That can influence how things look five, ten, even fifteen years down the line.”

While inflation can be intimidating, small cuts can help reduce expenses and stretch your paycheck. Spending tracking also increases awareness of spending behavior and can act as a barometer of financial health.

Related: Veteran fund manager picks favorite stocks for 2024