How Americans Got Their Money Mojo Back: Why Personal Financial Outlook Is at a 10-Year High

Break out the bubbly, America - more and more of you seem happier about your personal financial status, a new study states.

According to the AICPA, Americans "are experiencing their highest levels of personal financial satisfaction since the fourth quarter of 2006,", the New York City-based group states in its most recent Personal Financial Satisfaction Index.

The calculus driving the index is an intriguing one. The AICPA takes what it calls the Personal Financial Pain Index, and subtracts it from the group's Personal Financial Pleasure Index, to calculate, in broad terms, the actual Financial Satisfaction Index.

This quarter, that formula measured 24.1, a 7.6 point increase from the first quarter of 2017. The increase, the AICPA reports, was due to "a slight uptick" in the Personal Financial Pleasure index (1.4 points) and a "substantial" 6.2 point decrease in the Personal Financial Pain index.

That's good news, but study analysts warn against too much celebrating.


"In conversations with our clients, we've been telling them to be aware of the long-term trend," says David Stolz, CPA/PFS and member of the AICPA PFS Credential Committee. "People naturally overweight the current situation and forget that it is part of a cycle. Americans shouldn't let their present situation allow them to drift from their plan of reducing debt and adding to their savings. It's always wise to save some acorns in the summer, because we know eventually winter is coming."

For now, though, the good times seem to be rolling at an accelerated speed.

"Asset classes have been on the rise, we have seen prices of homes increasing and the stock market near record highs," says Brent M. Wilsey, owner of San Diego-based Wilsey Management. "This has led to an increased net worth for many Americans and an increased level of satisfaction."

Pair that with a low unemployment rate and growth in wage inflation and Americans have some good news to cheer about when it comes to personal finances, Wilsey notes. "Consumer satisfaction should translate into consumers feeling confident and ready to spend," he says.

The rise of the digital age has also set the stage for more positive consumer economic sentiment.

"With so many options to choose from, we can now see the power shifting towards the consumer," notes Jennifer McDermott, consumer advocate at Finder.com. "With fierce competition, consumers now have more power than ever before about where they choose to put their money, which could contribute to feeling much better about their personal financial situation."

McDermott says that, in the digital age, it's easier and more accessible to find the best deals. "Just look at the success of Yelp or TripAdvisor - both companies allowing the user to compare goods and find better," she explains. "Technology has facilitated those with the best product to stand out amongst the competition and be easily discovered by consumers. It also allows for that sense of satisfaction and control of knowing you've found the best deal."

"The rates of financial literacy are also beginning to rise," McDermott adds. "People are actively seeking to understand how their personal finances work to be able to live their best financial life."

Looking forward, even the most economically bullish Americans should keep debt and spending limited, if only to keep that positive emotional mindset.

"Consumers should keep in mind that the Fed will likely continue to boost interest rates, making it more expensive for banks and ultimately, the consumer to borrow money," said Robert A. Westley, CPA/PFS and member of the AICPA PFS Credential Committee. "In advance of future rate hikes, Americans should look to pay down their credit cards and other high-interest bearing debt as much as possible."

"Any future interest rate increase will result in higher monthly payments and therefore less disposable income and less financial satisfaction," Westley says.

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