Only 40% of US Consumers Plan Their Next Financial Move

A fundamental shift in consumer financial behavior is redefining the landscape for banking institutions, revealing that even high income doesn’t guarantee proactive money management when the economy gets tight.

New research from PYMNTS Intelligence reveals that consumer financial management isn’t solely a function of income but a reflection of distinct behavioral patterns. The exclusive report series, “New Reality Check: The Paycheck-to-Paycheck Report,” with its latest installment titled “The Financial Management Divide: Planners vs. Reactors,” identifies two primary consumer personas: planners, who adopt a strategic, proactive approach to managing their cash flow, and reactors, who handle bills as they arise, often relying on credit.

This report, based on a survey of 2,878 U.S. consumers conducted Jan. 8-20, details the behaviors and priorities that distinguish these groups. Planners are characterized by consistently paying off credit card balances, maintaining average credit card balances under $2,000, and holding $2,500 or more in savings. Conversely, reactors occasionally or rarely pay off credit card balances, carry average balances over $2,000, and have less than $2,500 in savings.

The balance between these two financial management personas is undergoing a shift, with economic pressures reshaping habits across all income levels. The report highlights a rise in reactive behaviors, a trend that is transcending traditional income brackets. This underscores the importance for financial institutions and wealth managers to understand these behavioral distinctions. Such understanding is paramount for developing effective planning habits and crafting solutions that can genuinely support stability and foster growth among their clientele.

Key findings from the report include:

40% of consumers fall into the planner category as of January, with the remaining 60% handling their finances reactively. This marks a decline in the share of planners since February 2024, when roughly half of consumers were categorized as planners, potentially indicating growing financial strain.

Generational differences are stark: Baby boomers are the only generation where planners constitute a majority (54%), while nearly three-quarters (73%) of Gen Z consumers fall into the reactor category. This disparity suggests that financial habits may evolve with age and experience, reinforcing the need for tailored financial education.

A surprising trend reveals that the share of high-income earners who are planners has plunged 25% since February 2024, with more than 1 in 2 (52%) of them now identifying as reactors. This indicates that even those with substantial earnings are not immune to new financial pressures from inflation, rising living costs, or shifting spending patterns.

Beyond these headline findings, the report delves into the intricate spending and savings patterns that differentiate planners and reactors. Planners dedicate 12% of their monthly budget to savings and investments, more than double the 5.6% allocated by reactors, illustrating a disciplined, long-term approach to financial security. Their top priority is often saving for retirement, a goal nearly three times more cited than by Gen Z. In contrast, 30% of reactors prioritize debt repayment, suggesting they are grappling with financial burdens that prevent wealth accumulation.

While both groups exhibit similar spending patterns for essentials and discretionary items, the divergent priorities underscore the necessity for financial institutions to offer tailored solutions. This includes tools for debt reduction and gradual savings growth for reactors, helping them transition toward more balanced strategies, and enhanced investment opportunities for planners to align with their future-focused goals. The insights highlight that financial stress may no longer be confined to those with limited resources, necessitating strategies that cater effectively to all income levels amid economic volatility.