This One Big Disconnect Could Be Sabotaging Americans' Personal Finances

Americans are a bundle of contradictions in their approach to personal finances. Many of us say we want to save money and are willing to cut back on spending, but we also eat out multiple times a week and go shopping as a treat.

Actions speak louder than words. There seems to be a big disconnect between what Americans say they want to do to save money, and what they actually do with their money. What do you really want, America -- frequent restaurant meals and retail therapy, or a healthy savings account balance? Sometimes you can't have it all.

According to recent survey data from Empower, Americans' emotions are sabotaging their personal finances. Let's look at a few tips and tricks you can use to regain control of your spending.

America's financial disconnect: Wanting to save, choosing to spend

Empower did a survey in December 2023 ("All In a Day's Spending: Americans' Habits Are Changing") to see how Americans spend money, and why. Seventy-three percent of Americans said that they're "willing to hold back on everyday spending for long-term gain." But this lofty goal is not matched by most people's actions in reality:

• 42% of Americans go shopping to treat themselves at least once a month
• 21% of Americans go shopping to treat themselves at least once a week
• Americans dine out 20% of the time (once every five meals)
• Gen Z cooks the least often, dining out 26% of the time

This is the big disconnect at the heart of Americans' personal finances: people say they want to save, but in reality they often end up spending. Whether it's weekly retail therapy, or near-daily restaurant dining, many Americans are missing out on clear opportunities to save money.

Emotional triggers drive Americans' non-essential spending

One of the unfortunate trends in personal finances in recent years has been the rise of "doom spending," where people spend even when they know they can't afford it. People might often feel powerless to stop spending, like they don't know where their money is going, like their money just "spends itself."

Emotions are a big driver of people's excessive spending. People sometimes spend money when they're happy or celebrating a special occasion, but they often spend money when they're stressed, anxious, or bored. There's a reason they call it "retail therapy."

The Empower survey found a few key emotional catalysts that lead to higher spending. Here were the biggest negative emotions that caused Americans to spend more money:

• Boredom (25% of Americans)
• Job stress (20% of Americans)
• Anxiety and uncertainty (20% of Americans)

The survey found that women are 37% more likely than men to spend money while bored, and 43% of Gen Zers spend money when bored. This makes "boredom" the biggest emotional culprit to make Gen Zers fall behind on their loud budgeting goals.

Social comparison and envy (aka: "Keeping up with the Joneses") can also be a big emotional trigger for nonessential spending, and nothing makes people feel bad about themselves more efficiently than social media. The Empower survey found that 24% of Gen Z has felt social pressure to show off their wealth on social media -- such as sharing posts of gourmet food, luxury gyms and personal training sessions, or high-end tech gadgets.

How to fight back against America's financial self-sabotage

Americans work hard, often have long commutes, and are pressed for time -- it's understandable that many people would choose to dine out instead of cooking dinner at home. But if you feel as if your daily spending is being driven not by convenience or necessity, but by unhappy emotional triggers, it's time to regain control.

There are great apps and banking services to help you live up to your savings goals:

• Budgeting apps: The best budgeting apps help you see where your money goes by automatically tracking your spending each month.
• Debt payoff apps: The best debt payoff apps, like Oportun (formerly Digit), can automatically move your extra cash toward customized savings goals.
• Banks with automatic savings: Some banks, like Ally Bank, offer automatic savings tools and digital "buckets" where you can save for specific goals from within your account.

You are not alone in fighting against boredom, envy, and the temptation to spend. There are great digital banking apps that can help you get visibility into where your money goes, and take control! Make sure your money is doing what you really want -- not just evaporating out of your bank account.

Bottom line

It can be hard to save money in a world of high grocery prices, where you feel constantly peer pressured by friends on social media and tempted to cure boredom with great deals at your favorite stores. But you are not helpless. Americans can make a few adjustments, get some help from budgeting apps, and try harder to make their money-saving goals into a reality.