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Consumer Optimism Has Soared: How to Improve Your Own Financial Situation

Elinor Rozenvasser Updated: March 19, 2024 • 3 min read
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Key Points:

  • 76.5% of consumers expect to be better off financially a year from now.

  • That’s the highest level of consumer optimism since September 2021.

  • Focusing on controlling your expenses, boosting your income, and setting financial goals can help you improve your own financial future.

A recent survey from the Federal Reserve found that consumer optimism has risen. Based on the January survey, more consumers expect to be better off financially a year from now.

Let’s explore why consumers might be feeling more optimistic about their financial future and how you can take action to improve your own finances today.

Consumer Optimism Rises

The Federal Reserve’s Bank of New York’s Center for Microeconomic Data reported that consumer optimism has reached 76.5% in its January Survey of Consumer Expectations.

Essentially, this number means that 76.5% of Americans expect to be financially the same or better off 12 months from now. That’s the highest level of consumer optimism reported since September 2021.

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Why Has Consumer Optimism Increased?

As consumer optimism increases, it’s natural to wonder why. The Fed survey also asked about inflation, labor markets, and household finances during the survey. Here’s a look at some of the reasons why consumer optimism might be moving in a positive direction:

  • Inflation: Although inflation remains a significant concern for consumers, the inflation rate has gone down in recent months. Falling inflation puts less pressure on consumer wallets, in part because stabilizing prices is easier for consumers to contend with.
  • Stock market gains: The stock market saw a big rally at the end of 2024. It’s likely this boost to investment accounts provided some additional peace of mind for consumers.
  • Adjusted habits: As the new financial reality of high inflation sets in, most consumers have made the necessary adjustments to their finances. For example, many have adjusted to buy more affordable goods or skip purchases altogether.

A combination of factors has led consumers to feel more optimistic about their financial futures.

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How to Improve Your Own Financial Future

Whether or not you are feeling particularly optimistic about your own financial future right now, it’s completely possible to move things in the right direction. When it comes to managing your finances, it’s best to focus on what you can control. Although broader economic conditions can have an impact on your financial situation, choosing to take charge of your finances can help you improve your situation regardless of the bigger economic swings.

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In the spirit of taking charge of your finances, consider the following action steps to build a brighter financial future:

  1. Set financial goals: It’s often difficult to make significant financial progress without a goal in mind. Take a look at where you want to go and map out some goals. For example, you might want to pay off your debt or cover your future retirement costs.
  2. Reassess your biggest expenses: Americans tend to spend the bulk of their budget on housing, transportation, and food. Evaluate your spending in these big categories to determine if you can make any cuts to significantly increase your savings. For example, trading in your vehicle for a more affordable ride could make a big difference to your budget.
  3. Build an emergency fund: An emergency fund is a key financial tool designed to help you weather any unexpected expenses that come your way. Many experts recommend saving between three to six months’ worth of expenses in an emergency fund. As you build these savings, consider tucking them into a high-yield savings account to put those funds to work.
  4. Pay off high-interest debt: Debt with a high interest rate attached can be a drain on your financial situation. If possible, start paying down your debt with any extra money you can find in your budget. For anyone who prefers to deal with a single payment, consider a debt consolidation loan to streamline your payment deadlines.
  5. Build a side business: The right side hustle can completely transform your income, which can help you make fast progress toward your financial goals. Not only can a side hustle help you grow your income, but it can also help you build new skills. If you need help getting your business off the ground with a cash infusion, consider a small business loan.

The Bottom Line

Many Americans are feeling good about their financial future. If you want to create a brighter financial future, it’s entirely possible.

Consider getting started by building an emergency fund in a high-yield savings account. Or, if you want to take a more aggressive approach, consider kickstarting a side business with a small business loan.

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Elinor Rozenvasser is a content writer and editor with a knack for finance. She holds a Bachelor's in Communications and Business from Reichman University, and has been swimming alongside finance specialists for over a decade. She's not your typical financial writer, though. She's more likely to use witty puns and sarcasm than jargon and technical terms. But don't let that fool you. She's still a whiz when it comes to explaining complex financial concepts in a way that anyone can understand. If there's any writer who can make finance fun and engaging, Elinor is your girl. She's sure to leave you laughing (and learning) long after you've finished reading her work.