Why 30-Somethings Freak Out About Money Just As They Enter The Prime Earning Years

Age might bring wisdom, but it doesn't do much for financial confidence.

At least not until you reach your 60s.

New research from LearnVest finds that people in their early 20s and late 60s feel the most confident about their money, while people ages 35-44 feel the least.

In fact, an analysis of survey responses from over 10o,000 LearnVest site visitors found that financial confidence levels over a lifetime create a U-curve:

LearnVest

Earnings, however, create the opposite shape, peaking in a person's 30s, 40s, and early 50s. Apparently, it's when people are earning the most that they feel the least confident about it. 

LearnVest suggests that this seeming discrepancy is actually more related to the blue line in the graph below: average income growth rate over time. 

Although the youngest people surveyed aren't earning much compared to the older groups, they are experiencing high average levels of income growth, which "makes it more likely that they'll have the cash flow to at least cover their current expenses and debt payments - keeping confidence high," the whitepaper reads.

LearnVest

Of course, the root of this discomfort probably has a lot less to do with how much money is coming in than how much money is going out. 

"The data shows that average Americans are facing their biggest household size, mortgage payments, and vehicle payments in their lives just as their income growth is peaking, with low likelihood of a significant pay increase ahead," LearnVest writes. "Revisiting our confidence data with these insights in mind, it's less of a surprise that confidence starts plummeting in the mid-30s and 40s demographics."

In this graph, you can see spending levels peak as confidence levels plummet, and vice versa. 

LearnVest

Is the effect exacerbated by scarcity? Do people with less money feel less confident? To a degree.

LearnVest found that the same dip in confidence emerged across income brackets ranging from $30,000 and below to $150,000 and above, meaning that no matter how much money people have, they still feel similarly at different life stages - although overall, the confidence curve moved up a few notches along with income.

LearnVest