A Crisis of Financial Confidence is Reshaping the American Dream— Here's How to Navigate It, With U.S. Bank

0:00I recently went on a quick beach trip with my husband for a little couples time and it was perfect. We sat in the sun, swam in the ocean, and generally just tried to get to that place of deep relaxation where your shoulders actually drop a few inches. Do you know what else can give you that feeling? Co-hosting with Airbnb. Trust me on this one. Hosting your home on Airbnb while you're away from home is a great way to make some extra cash and make sure your home is working as hard as you do. But knowing where to start can feel overwhelming. That's where co-hosts come in. These are local experts who can help make hosting even easier by taking care of all the little details back home while you're off enjoying yourself.

0:40Co-hosts can handle everything from staging your space to communicating with guests to offering on-site support so nothing interferes with your time away from home. Whether you're living the digital nomad life or just taking a well-deserved reset, I love this for you. Looking to get started? Find a co-host at airbnb.com slash host. Today's episode is a really special one for me. A few months ago, I signed a deal with U.S. Bank. At the time, I was still dealing with the wake of the LA fires. I was living in an Airbnb. I didn't have a studio or even a couch to record from. My team and I had hoped that we would find a partner that would help us rebuild the studio and that this partner would want to support our work out of a shared belief in the importance of financial literacy.

1:26U.S. Bank got what we were doing immediately. And this is probably the most personal partnership I have ever done. And I will forever be grateful for the heart that I've seen in U.S. Bank, which is exactly what I want to see in the financial institutions I work with. And I'm sure you do, too. I have loved seeing how U.S. Bank puts in the work to understand how people are feeling about their money right now. And what they've found this year is that there's a crisis in confidence when it comes to money. So today, to help tackle this crisis and help you feel more confident, I'm talking with Scott Ford, Head of Wealth Management at U.S.

2:00Bank, and Kate Phelan, California Regional Director of Strategic Wealth Planning and Advice. We'll get into what's really behind this financial anxiety, why younger generations feel like traditional success is out of reach, and how we can reclaim that sense of control even in the middle of economic chaos. We also get actionable, like how to prep for buying a home, what to prioritize at different life stages, how to approach retirement in a world where it's getting longer and less predictable, and what small money wins you can start today to build real momentum. Scott Ford and Kate Phelan, welcome to Money Rehab.

2:35Thank you for having us. Yeah, great to be here. So I want to dig into the numbers here because a recent survey from U.S. Bank found that there is a crisis of confidence going on. And I want to understand what that actually looks like to you from the numbers and from talking to clients and customers. Yeah, no, it's a great question. You know, and we do these surveys annually. And this year's survey was really about how are people feeling, you know, just given the general economic environment. And what we learned is, you know, people feel pretty good about the things that are within their control.

3:07Right. And they're doing a lot of the right things. They're saving, you know, they're budgeting, they're cutting expenses where they can. But it's the things that are outside of their control. Right. Like the overall economy, inflation, geopolitical environment. That's where it's causing a lot of anxiety for folks right now. Makes so much sense. I mean, the only thing we can really control is ourselves, of course, but there are a lot of X factors out there. Kate, do you think that that's translating into missed opportunities in the financial world? I do. Unfortunately, I think that right now this crisis in people's confidence as we're seeing it has led them to maybe not panic, but freeze a little bit.

3:49When people think that they don't have control of the situation, they sort of pull in. They maybe don't do the things that they would have otherwise in terms of their financial well-being because they want to wait and see what's going to happen. So I definitely think that people are missing opportunities or maybe making moves that may be disadvantageous for them, unfortunately. Because I think generally, Scott, this idea of the American dream or what success looks like has changed. So when you talk to millennials and Gen Z who are trying to do the right things, trying to save, trying to invest, trying to save for a house, how do you frame success today for them?

4:26Some of the insight suggests that the way people define, I guess, financial success really has kind of remained pretty constant. People still want to own a home. They still want to have a family. They still want to be able to save for retirement. And I think that what feels different, especially for Gen Z and millennials, that feels like it's out of reach for a lot of folks. And it just, you know, in some respects, some are even giving up. A quarter of millennials and Gen Z people are giving up on the idea of owning a home and having a family. Yeah, I saw recent numbers that even if mortgage rates were zero, it would be hard to afford a home these days.

5:08Kate, what are you seeing as far as how success is defined in this climate and how it's changed from the generation before? I agree with Scott in the sense of we look to these consistent milestones of what maybe that definition of success is. But to Scott's point, people are achieving success in much less linear and consistent ways. Sort of used to be, OK, I'm going to get out of college and I'm going to get married and I'm going to buy a house and we're all sort of on this journey. and look at the millennials and they're kind of all over the place, right? In terms of when they're achieving that.

5:42So I think that the milestones for success are the same, but what it looks like to achieve that success and how we're defining it for ourselves. I think that's changing a lot, which isn't a bad thing, by the way, it just changes the landscape in terms of the industry that Scott and I are in. And it changes the way that we talk about what that financial well-being looks like and feels like because it's not the same. It's not as consistent or linear as it was a generation or two before us. Yeah, the timeline has changed, which isn't necessarily good or bad. It's just different. It just is. So Kate, if we can double click for a second on home buying, if somebody is thinking about buying a home in the next five years, what should they be thinking about to set themselves up for success there?

6:29There's the obvious, you've got to save for the down payment. And that feels sometimes insurmountable or like a lot just in of itself. But there are other things that people need to be doing to put themselves in a good position to be ready. So that includes things like, make sure that your credit score is in good shape, make sure that you have other debt that you might be servicing, taking care of, right? Make sure that you're making a choice that is not the one that you think you need to make now, because it's that time to hit that milestone. but it's a choice that you're actually ready for. And then don't lose sight of your financial wellbeing beyond that goal of buying the house.

7:06You still need to be doing things like, am I contributing to my 401k? Am I making some of these other small money moves that are going to put me in a good spot so that when I am ready to own the home, I'm truly ready. So I think that, you know, it's not just about saving for that down payment. It's about being in a spot where you feel actually secure with what that's going to mean. Because servicing a mortgage and being the one who's responsible when the water heater blows up and things happen like that is really different. And people need to make sure that they've really thought that through and are prepared for it.

7:39I know it's never, is it the right time to buy a house, which we hear all the time? Is it the right time for me and my family specifically? And Kate was talking about your 401k. U.S. Bank found that longevity and this economic instability, uncertainty, if you will, which markets don't like and savers and investors get nervous about, anxious about, as you said. How does that change how people should be thinking about retirement? If people are living longer, retirement's going to be longer, but it's also going to be more precarious. We're seeing like this first generation even coming to retirement with a 401k.

8:19That's right. Versus pensions. You know, it's interesting. I mean, you know, we've all benefited from advances in health care. People are generally trying to live healthier lifestyles. That's certainly true of Gen Z and millennials. And so we're living longer. Right. But at the same time, you know, people are reluctant to increase their savings. You know, the thing we recommend people do is at least as it relates to your 401k plan or whatever your retirement plan is at work, if your company has a match, at least contribute up to that point. You know, my mom, you know, she taught school for 30 years.

8:55She retired at 55 and right, she's going to be 84. So people often underestimate the length of time that they're actually going to be retired. And if you put it off and start later and you don't save enough, you're going to potentially outlive your savings. I mean, it's amazing for mama. Yes. But it's also expensive. It is. It is. So Kate, if you're in a different part of your career, we talked about shifting the timeline and millennials and Gen Z are doing that. How should somebody say in the middle of their career or somebody in the peak of their career think about prioritizing retirement differently?

9:29I think that people need to bear in mind that you have a couple of different horizons that you're looking at. What am I trying to achieve financially in the next three or five years? And what am I trying to achieve long term, right, for the rest of my life? And what will that look like? If you're in the heyday of your career, you're in that building wealth stage of life, you need to be thinking about all of the competing priorities that you have. So Scott makes a good point. It's one of, I think, the most critical for young people is make sure that you're matching your 401k contributions with what your employer will do.

10:02Because if not, you're just leaving money on the table. So make some of those types of choices. But you also have to zoom out and look at life is expensive right now. So if you are a young person in your career, chances are good you might have young kids. You might have other expenses associated with that time in your life. And so you have to think about how do I make choices that are going to be good for me right now without losing sight of I do someday want to retire. If you're in your 30s right now, retirement might feel like it is a long ways off, right? But you still have to make some of those choices about how am I going to prepare for it?

10:37especially to Scott's point, I think that we're going to see people who are retired for much longer than they used to be because of the longevity that we're seeing. That means you have to make different choices. Skip ahead if you're in your 50s or your 60s right now and retirement is really something that you're like, hey, that's going to happen really soon. Then are you doing things like making the catch-up contributions to your 401k? And then beyond that, Scott and I like to talk about not just what does this look like for you financially, But what does it look like for you emotionally? Do you want to travel?

11:09Do you want to start a new hobby? Do you want to adventure in some other way? What does that look like? What's that going to cost? What does that take? And then bear in mind that that probably is going to look different, right? When you retire, you may have your, Scott, I think, calls them the golden years of retirement, where you're out and you're traveling and you're doing stuff. And later in retirement, you're probably not able to. Now you've got medical expenses, things like that. So that's a lot to think about all at once, which is why I like to sort of, you know, zoom back to what am I doing right now?

11:42I need to make some choices about what I'm doing long term, and then know that that's a journey and that's going to change, you know, along the way. Having a financial plan is super helpful to help you get rooted in that and just know what your picture is. But I think when you can balance that you have short and long-term priorities, it makes it feel a little bit more achievable because you don't have to achieve everything all at once today. It is truly a journey. Yeah. And the earlier you start, the better. You can't really contemplate in your 20s and 30s what it will be like in retirement. But let's talk about Mama Ford.

12:16I mean, she was a teacher, so she wasn't making a lot of money. That's right. But if she started earlier, what you need is time. That's right. More than a lot of money. And that's what we educate people about. Like the earlier you start, the less you have to contribute, right? Because of the power of compounding. The later you get started, the more you have to try to put away, right? Because you have, you just have less time. And so we just encourage people, you know, and I really do mean this, like take advantage of what you have at work first, right? Because you can get, you know, some benefit from tax deferral and all those things and the company match that many employers will give.

12:51And it's like you're doubling what you can potentially put away than if you didn't participate in that program. So is there a different framework that we should be thinking about when we're calculating retirement, which is, by the way, so morbid and never a fun day to think about, right? Because I'm assuming your mom took the annual expenses she had, multiplied it by the time she thought she was going to be alive after retirement. So it was from 55 to now 84, or I don't know what calculation she did at the time, but people are living longer. So is that an outdated formula? First of all, I don't think mama was very deliberate and intentional about, you know, what she was going to put away for retirement.

13:32And she was fortunate in that she had two things like school teachers and they get a pension or at least they used to. And she had an opportunity to save in some tax deferred kind of accounts. So she kind of did a little bit and it was like it was enough by the time she retired. And, you know, when she got to that point, her house was paid off and, you know, your biggest expenses are behind you. But I don't think people really like think about, you know, she's been retired as long as she worked. Right. And like if you're in relatively good health and, you know, your family history suggests that, you know, you might live a long time, you kind of want to take those things into consideration.

14:08And I think that's why people who have kind of gone through that planning conversation. Because for me, it's less about the document that kind of gets printed out at the end. It's more about the process of thinking through those things, right? And getting some sense of, hey, this is where I am today. Given my current lifestyle, spending patterns, all of those things, I expect my expenses to kind of be here. So I know I want my nest egg to be at least this, right? And so, but it's that process of going through that to make you think about it is I think probably the most helpful thing. Well, the tricky part with that is that we don't know how much stuff is going to cost.

14:47That's right. That X factor, right, Kate, of inflation. And then you mentioned being in good health, but maybe you're not, God forbid. So how do you think about factoring in inflation or medical expenses when you're doing this? And by the way, how do you even get into the idea of calculating your own mortality? Like not my most favorite activity. It's an important point, though, right? It's expensive now, it's probably going to get more expensive. And if you do end up in a situation where you're retired for a very long time, your expenses are going to change. And things like what is it going to cost if I'm not well for part of my retirement, then you need to think about that.

15:30And it's not as easy as just saying, here's what it will cost, right? There's not a straight line formula that you can apply. And because of the way that we're seeing, particularly in these younger generations, this much less linear and consistent way that people are working and living their lives, you can apply that to the way that you look at retirement as well. So I think the bottom line is that you have to account for it, especially now with the kind of longevity that we're seeing. You have to think about the fact that your health care expenses are almost certainly going to be a part of that analysis.

16:04So, Scott, we started this conversation with the crisis of confidence. And so people are hearing a bunch of scary headlines out of Washington, like skyrocketing dead. And then, you know, inflation that we saw a few years ago that was run away and, you know, possibly could happen again. And think, what is all of this even? Why am I doing any of this? Is it even worth it to be saving and budgeting and investing? Yeah, it's a great question. But, you know, what I encourage people to think about is the fact that, you know, some of the data from the survey suggests that this lack of confidence is really a function of kind of like the things that are outside of their control, like the economy, inflation, cost of housing, geopolitical tension, all those things.

16:52But really, all those things have kind of always been there, right? Like we often look back and we use history as a guide, especially as we try to forecast going forward, right? There have always been recessions. There have always been geopolitical risk. They're always kind of like inflation is looming in the background, right? You've never had any control over any of those things. I think that what is different today is people, it's almost you don't get a break from the headlines, right? Like we all kind of, and I'm guilty of it too, on our social media feeds, you know, 24-hour news cycles. I wake up first thing in the morning, I turn on the financial news, and sometimes I have to remind myself, hey, turn that off for now, right?

17:36Like there's an intensity and a velocity, I think, in the current time that didn't exist before. So it feels terrible and hopeless, but it isn't. This too shall pass. We've been through these things before. And that's why it's important to kind of like stay the course. Because if you get paralyzed and you, and for example, some people have given up on or not even started saving for retirement. They've given up on being able to own a home. They've given up on being able to start a family. According to some of the survey data, got to believe that, hey, this too shall pass. I'm going to keep doing the things that I can do that are within my control.

18:12I'm going to keep saving. I'm put away money for retirement. I'm going to start my family at some point. At some point I will own a home, even if it takes a little longer. Always a good reminder. So, so it's not the velocity or intensity of what's happening in the news. It's the velocity intensity of the consumption and how fast it's coming at it. So we've never not recovered from a single recession or depression in U.S. history. We're just seeing it a lot more in our face now. Wow. And speaking of scary headlines, as you guys know, I lost my home in the LA fires. US Bank has been with me during such a difficult time and such a big part of the community.

18:49So thank you personally, Kate. You're an Angeleno. So you've probably also been affected in one way or another. It was, I mean, as somebody who covers this every single day, going through it myself was a masterclass on how to financially prepare for unexpected disasters or hardships. What should somebody be thinking about before something like that happens? So first off, I'm really sorry about your house. What we saw in LA earlier this year was just gut-wrenching. At the risk of sounding a little bit like a negative Nancy, my best advice when it comes to these kinds of things is you have to accept that bad things are going to happen.

19:34It's not a matter of if you have a financial issue. It's kind of a matter of when. So the sooner that you can say, you know what, sometimes things are going to go wrong. My car's going to break down. I'm going to get sick. The roof is going to collapse. The dog's going to get sick, right? 60 % of Americans right now would be absolutely just taken down by a thousand dollar unexpected expense. Everything costs a thousand dollars now. So you have to have a little bit of money set aside. Having that emergency fund, it's called an emergency fund for a reason, because bad things do happen sometimes.

20:08Don't have it be just truly insult to injury when you can't afford to face those types of things. From a bigger picture, one of the things that we saw after the fires, regrettably, were a lot of people who were underinsured or maybe misinsured or didn't know what their insurance looked like. So I think it was hopefully a good wake up call for a lot of people to get out the insurance policy, take stock of what do we have? How do we have it insured? Are we in a good spot? If heaven forbid something like that were to happen, making those kinds of preparations, like I said, is just going to make it a little bit easier to withstand when something does go wrong.

20:50All right. Let's turn this into something more positive for a moment. We'll put negative Nancy in the corner. Debbie Downer can take a seat. Let's talk about some financial wins that you guys both have that keep you excited about the progress. I know when I was getting my financial life together and I was getting myself out of credit card debt and compound interest, I only understood that force being used against me. I didn't realize that that same power could be used in my benefit through investing. And once I started seeing that progress, I was hooked. So how can people start thinking of that momentum for themselves to stay on it?

21:35One of the things that I constantly tell people is, you know, pay yourself first. We all kind of pay our bills all the time and you kind of want automatic pilot. and those are the things that you kind of growing up taught to do. But think about your own financial health. I love what you said about kind of paying down credit card debt. We've all been there. And people often don't realize that if you're just making the minimum payments, right, it could take you a really long time to pay off that high interest credit card debt. So even before you start really investing, I would say that that's the place where you want to start.

22:05But I tell people pay yourself first and automate your savings, right? Like put it on automatic pilot so that like you don't even have to think about it, that you don't like you don't touch it. You don't miss it. Like you'll get used to kind of like just, you know, if you start where you are, it doesn't have to be monumental. Right. It's like when you're going to start working out or exercising, just getting to the gym is the win. Right. So setting up a savings account, automating your savings, making sure you have some sort of automatic transfer to that account that you won't touch. that's not attached to your debit card so you can't go pull the money out.

22:40And you would be surprised how quickly that balance can start growing. And that's going to give you the confidence to keep going and even actually increase it. It's so true. I mean, you know, when I was pregnant, I could not go to the gym to save my life. I showed up one time and I was just like, I'm happy that I put on stretch pants. Like that was a win for me. How do you think about the avalanche method versus a snowball method? Yeah, look, I think that it's like a diet, like all of them work, right? If you follow the method, right? And this is what I did personally, by the way, like I paid off the smaller balances first, because it just felt like psychologically, it felt like a win to see a credit card balance kind of go to zero.

23:24And then you take that money that you were using to pay that one and put it on the next largest one. So you get the smaller ones out of the way. And that's what I did personally. But I know there are all different types of ways to do it. You just have to do it. Yeah, I did the avalanche method where I listed all my interest rates. Because actually, when I started, I didn't know. And I didn't know that they were different. So I listed highest to lowest, and I tackled the highest first. But I think that if you do stick to one plan, and I think of the highest interest rate first as my preferred plan, because that's what I personally did.

23:57You just can't switch mid-game. That's right. That's right. That's right. I want to tell you guys a story about early in my financial life when I was in credit card debt. I was so overwhelmed about breaking that down because it felt like such a big number to me. And I'm first generation American. So I grew up in a family that didn't talk about money. But when they did, it was just cash. I never learned what a mortgage was. I never understood the concept of debt. And so I felt a lot of shame and I felt a lot of overwhelm because it was such a huge number. But I broke it down by the day. Like not even by the month or the year, I broke it down to$7 a day.

24:33And for me, it just felt more manageable. It was like I could do$7 a day. That I can tackle. And I did. And it took me two years. I got out of credit card debt. I never turned back. I did the same thing actually with my taxes. One day I thought I'm going to sit down and do all my taxes on a Saturday. Like I blocked it out. And what ended up happening was all of my receipts were all over the floor. I didn't do anything but probably drink wine and eat Haagen-Dazs. Then I changed my methodology and I said, okay, one day all I'm going to do is uncrinkle my receipts. That's it. That's all I'm going to do.