When it Comes to Finances, Optimism on the Rise

Mutual of Omaha Protection Index indicates positive sentiments
A November survey conducted by Mutual of Omaha reveals a notable uptick in overall financial confidence when compared to results from the same survey conducted in March.

Breaking down the findings by generation, almost all respondents express a more positive outlook on their immediate financial situation compared to earlier in 2023. But that confidence begins to diminish when looking a decade ahead.

The exception to this trend is millennial respondents, who continue to express concerns about their short-term financial situation but exhibit increased confidence when projecting a decade into the future.

A Mutual of Omaha financial expert attributes this renewed optimism across most generations to a combination of surging markets, declining inflation, stabilizing interest rates and an often-overlooked factor — gas prices.

“Consumer sentiment is almost 100% correlated to gas prices, which is pretty crazy because it’s not a huge line item in people’s expense budget every year,” said Mutual of Omaha Chief Investment Officer Ryan Comins, who is responsible for setting the strategy for and overseeing the management of Mutual of Omaha and its affiliates’ $40 billion investment portfolio.

“But it’s something that they see. They drive by every day, and the price changes every day. So, when it’s on its way up, people are concerned about how I’m going to fill my gas tank next week. And when it goes down, they say ‘Oh, I’ve got an extra five bucks this week to go get a Starbucks.’”

Housing market driving concerns
Rather than analyzing survey results by age, Comins suggests another way to gain an accurate understanding of financial sentiment is by comparing the outlook of homeowners and those aspiring to purchase a home.

The current housing market, characterized by rising prices, short supply and high mortgage rates, is top of mind for renters of all ages who may be evaluating their long-term financial picture. Overall, rent has remained stable and may have even decreased for some in recent months, creating a bit of short-term optimism, Comins said. However, the scarcity of affordable houses for sale continues to cast a shadow on long-term aspirations.

“Renters would be reasonably favorable in the now but not in the future,” Comins said. “They probably weren’t in the market for a house right now but they’re thinking, ‘I was planning on saving for a down payment, and now it is so out of reach.’”

Women more optimistic about finances
Women emerge as one demographic expressing renewed optimism in the latest survey. In March, only 15% of women felt confident about their current financial future, a figure that increased to 24% in the latest survey. Comins speculates this could be the result of putting the impact of the pandemic behind them and finding new opportunities in the workplace.

“Now hopefully the world is open a little bit more maybe they’re seeing more prospects at work,” Comins said.

The survey also indicates an increase in optimism when data was segmented by earnings, with all but the highest earners indexing higher in November than in March.

A plan of financial independence
Regardless of what stage of life you find yourself in or how optimistic you are about protecting financial future, you can live a life free from worry about money while you pursue your goals. It just takes the right plan. To help you get started building the right strategy for you, check out these proven tips for financial independence at any age.