Personal financial satisfaction up in first quarter after market rebound

By Samiha Khanna

As 2018 came to a close, the average American’s personal financial satisfaction, as measured by the AICPA’s Personal Financial Satisfaction Index (PFSi), took a tumble for the first time in two years. But a stock market rebound in the first quarter of 2019 pushed the PFSi to a new high of 36.1, an 11.3% bump from the previous quarter. A near-record number of job openings also contributed to an overall positive outlook for the average American in the first quarter, according to the PFSi, which was released Thursday.

Improvements in the PFSi were largely driven by an 11.3% gain over the previous quarter in the PFS 750 Market Index, a proprietary AICPA index of the 750 largest companies trading on the U.S. stock market.

Though these market shifts may drive some investors to adjust their portfolios, Mark Astrinos, CPA/PFS, a member of the AICPA Personal Financial Specialist Credential Committee, cautioned against making spur-of-the-moment changes.

“We know that markets will fluctuate over time, but a well-built plan will take this into consideration,” Astrinos said. “Reviewing plans frequently is good practice; however, making frequent changes in light of market or economic conditions is not advisable. You want to be strategic with your financial planning efforts, not reactive.”

Another notable contributor to Americans’ financial pleasure was continued growth in job openings, which reached a record high in the third quarter of 2018 and remained steady in the first quarter of 2019. The per-capita job openings index was up 16.3% from the first quarter of 2018, with growth in every sector measured by the U.S. Bureau of Labor Statistics.

Underemployment also dropped 4.7% from the previous quarter and 12.9% compared with the first quarter of 2018. Loan delinquencies dropped 5.5% since last quarter.

The blended inflation measure for the first quarter of 2019 was 1.75%, which is below the 2% target set by the Federal Reserve.

Compared with the previous quarter, pain from personal taxes has remained relatively flat. But with the April 15 tax deadline behind them, many Americans might be enthusiastic about their personal finances because they’re anticipating refunds.

These refunds present another opportunity for workers to consider how this cash could help their long-term financial strategies, Astrinos said.

“If you find yourself in a position where you’re receiving a tax refund, you should stop to consider if there are areas in your financial life that could improve by utilizing these funds,” Astrinos said. “As tempting as it may be to book a vacation, oftentimes delayed gratification measures such as establishing an emergency reserve for a rainy day or saving for next year’s IRA contribution will help build stability for your long-term financial plan.”

Additional information about the PFSi can be found at aicpa.org/PFSi.

Samiha Khanna is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA’s editorial director, at Kenneth.Tysiac@aicpa-cima.com.

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