Financial discipline grows 5 years after crisis

Dominic Plummer of Atlanta shops in an H&M store. A survey shows Americans have become more frugal since 2008.
Dominic Plummer of Atlanta shops in an H&M store. A survey shows Americans have become more frugal since 2008. (DAVID GOLDMAN / AP)
Posted: April 05, 2013

The frugality and investing discipline the 2008 financial crisis imposed on Americans appear to have led to permanent changes in behavior on money matters, according to a survey by the nation's second-largest mutual-fund company.

Spendthrift ways are unlikely to become as pervasive as they were before the crisis, Fidelity Investments concluded Wednesday in releasing results of its "Five Years After" survey of more than 1,150 investors.

Positive behaviors that appear now to be entrenched include saving more in 401(k) plans, paying down debt, and taking more care to invest wisely.

"These tend to be very sticky decisions because you begin to budget and spend around a higher savings rate," said John Sweeney, an executive vice president for retirement and investing with Fidelity in Boston. "People are taking control of their financial lives, and control breeds confidence."

Survey participants were interviewed over two weeks in February, nearly five years after the government-brokered rescue sale of Wall Street firm Bear Stearns to JPMorgan Chase. That event, in March 2008, is regarded as a tipping point for the more tumultuous upheavals that followed.

Key survey findings include:

Fifty-six percent reported their financial outlook changed from feeling scared or confused at the beginning of the crisis to confident or prepared five years later.

Survey participants estimated their households had lost 34 percent of the value of their total assets, on average, at the low point of the crisis. Thirty-five percent experienced what they considered a large drop in income; 17 percent said at least one head of household had lost a job.

Forty-two percent increased the amount of regular contributions to 401(k)s or to individual retirement accounts or health-savings accounts.

Fifty-five percent said they felt better prepared for retirement than before the crisis. But among participants who reported still feeling scared, just 34 percent said they were better prepared for retirement.

Forty-nine percent have decreased their amount of personal debt, with 72 percent having less debt now than they did before the crisis. Just 31 percent of those who are still scared reported they'd reduced debt.

Forty-two percent have increased the size of the emergency fund they've established to meet large unexpected expenses. Among those self-reporting as scared, only 24 percent have a bigger emergency fund now.

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