Is America’s Financial Stress Due to Inflation, Corporate Greed, or Bad Financial Habits?

Financial stress is dominating the headlines and significantly influenced the 2024 election. Surveys reveal that approximately four out of five people in the U.S. feel anxious about their financial situation. Many cite inflation, everyday expenses, corporate greed, economic uncertainty, high interest rates, and debt as key contributors. But should we blame the Federal Reserve, corporations, or ourselves? Let’s explore the factors behind this crisis and how individuals can regain control. For a quick overview, see the TLDR summary at the end.

Financial Stress Across Generations

Baby Boomers: Many worry about covering living expenses, rising healthcare costs, and their reliance on Social Security.

Gen X: Over half report feeling unprepared for retirement.

Millennials and Gen Z: Student loans heavily impact these groups, delaying milestones like homeownership and savings.

Across all generations, Americans are increasingly relying on high-interest credit card debt as a financial buffer. As of May 2024, U.S. credit card debt reached a record high of $1.27 trillion, up 4% from the previous year. With average credit card interest rates at 22.76%, the strain on those carrying balances is significant. In response, 55% of Americans are prioritizing rapid repayment as a key financial goal.

This financial stress is more than just a numbers game. It’s linked to health issues such as sleep disturbances and strained relationships. The pressing question remains: how do we address the root causes and reverse this unhealthy trend?

Inflation, Interest Rates & Corporate Greed

As of November 2024, the U.S. inflation rate stood at 2.75%, a significant decline from its 2022 peak of over 9%. That surge was largely driven by supply chain disruptions and increased post-pandemic demand. However, prices for certain goods remain volatile—for instance, food prices have risen sharply, while energy costs have declined.

The Federal Reserve’s interest rate policies have played a major role in managing inflation. Recent rate cuts, reducing the federal funds rate to 4.58% from a 2024 high of 5.33%, are expected to further cool demand in 2025. However, these policies often have limited impact on necessities like food and healthcare.

Critics also point to corporate greed as a factor in financial stress. Practices such as price-gouging, excessive executive compensation, and stagnant wages exacerbate the issue. The Groundwork Collaborative found that corporate profits accounted for 53% of inflation from April to September 2023, compared to a pre-pandemic average of 11%. According to the Economic Policy Institute, corporate profits were at their highest in decades, even as wages remained relatively stagnant for most workers​.

This nuanced picture suggests that although overall inflation has improved, financial stress still persists due to the interplay between interest rates and corporate practices. However, those are external pressures that individuals cannot directly control. Meanwhile, there are significant factors such as daily financial habits that are well within an individual’s control and shape how these external pressures are managed.

Poor Habits Lead to Negative Outcomes

America faces both a physical and financial health crisis.

• Physical Health: According to the CDC, over 42% of American adults are obese. Poor eating habits, lack of exercise, and neglect of healthcare contribute to chronic diseases like diabetes and heart disease, rising healthcare costs and stress.

• Financial Health: Many Americans struggle with overspending, lack of budgeting, and reliance on high-interest debt. These habits lead to increased financial stress and difficulty saving for emergencies or retirement.

Daily preventive care is key to improving both physical and financial health. Just as exercise and nutrition strengthen the body, smart budgeting and consistent saving build financial resilience. Small, consistent actions—like strengthening an emergency fund or automating savings—can shield against unexpected expenses and build long-term security.

Social Influences & Psychological Barriers to Better Habits

Building strong financial habits is challenging due to social and psychological factors:

Social Influences

• Cultural Norms: American culture’s emphasis on consumerism encourages spending over saving. Social media amplifies the pressure to “keep up” with others, while frugality is often stigmatized. Meanwhile, it’s often taboo to talk about finances in social groups.

• Inconsistent Education: Financial literacy is not universally taught. Only 24 states require high school students to take a personal finance course, leaving many unprepared to manage their finances.

Psychological Barriers

• Short-Term Thinking: Human behavior has a tendency to prioritize immediate gratification over long-term financial goals.

• Overload and Avoidance: The abundance of financial advice can be overwhelming, leading to procrastination.

• Emotional Resistance: Money is deeply tied to emotions like fear, shame, and guilt, which can discourage honest financial assessment.

The Future of Financial Health Tech: Daily Financial Habits

Addressing social and psychological barriers can make adopting financial habits easier. Solutions should focus on:

1. Simplifying Financial Actions: Break tasks into manageable steps, such as setting up a high-yield savings account or tracking expenses for one week. Technology can reduce the effort required.

2. Incorporating Behavioral Science: Use gamification, nudges, and celebrating wins to make financial habits engaging and rewarding.

3. Providing Gradual Education: Offer bite-sized lessons to build confidence over time.

4. Normalizing Financial Discussions: Encourage open conversations about money to reduce stigma and share strategies.

5. Leveraging Automation: Automate budgeting, savings, and investing to minimize decision fatigue.

Apps like Monarch Money, Wealthfront, and Betterment are already making financial management easier through automation in budgeting, saving, investing, and tracking. Communities on platforms like Reddit’s r/PersonalFinance, Alinea Invest, and Parrot Finance also provide valuable peer support.

Richuel, a new platform launching in 2025, aims to bring these solutions together. Inspired by health apps like Noom, Richuel offers guided daily money habits, bite-sized lessons, behavioral coaching, and progress tracking. The goal: to make financial health as easy and enjoyable as building physical fitness has become.

TLDR Summary

Financial stress in the U.S. is at record highs across generations, with a notable increase in reliance on high-interest credit card debt. Inflation has improved, but corporate practices and rising interest rates continue to strain households. While these factors are beyond individual control, improving daily financial habits can help.

America faces both physical and financial health crises, driven by poor daily habits. Solutions lie in consistent preventive care: budgeting, saving, and investing for financial health; similar to exercise and nutrition for physical health.

Social norms, inadequate financial education, information overload, and psychological barriers make habit-building challenging. Inspired by health apps like Noom, new tools like Richuel are making financial health easier through automation, behavioral coaching, bite-sized education, and community support.