A Link Between Financial Resolutions and Realities?
Saving for retirement in a workplace savings plan or IRA is the top long-term financial goal, according to a new survey. More good news: More than one-in-four (42%) said sticking to financial resolutions is easier than sticking to other common resolutions, such as exercising regularly or pledging to give up smoking.
But the survey also contains the sobering finding that financial resolutions for the new year are on the decline as 2015 approaches. According to Fidelity Investments’ sixth annual New Year Financial Resolutions Study, only 31% of Americans are making financial resolutions for 2015, compared with 43% a year ago.
And while New Year’s resolutions are notoriously short-lived, the survey found that among those who say they made a resolution at the start of 2014, more than one-half (51%) now feel they are better off financially. In contrast, only 38% of those who did not can say the same. For those who made a resolution last year, almost two-thirds (74%) succeeded in at least getting halfway to their goal, and 29% were completely successful.
The decline in financial resolutions may reflect a heightened sense of well-being; 41% of respondents feel better about their present financial situation than they did the same time last year. In addition, 36% say they are carrying less debt than the year before, and nearly two-thirds (64%) expect their bonus or tax refund will be at least the same, if not larger, in the year ahead.
This feeling of personal prosperity was most strongly felt among the younger generation. Exactly half of Gen Y-ers (born 1979-1996) say they are in a better financial position this year, with only 8% indicating they are worse off.
For the fourth consecutive year, the top three financial resolutions continue to be:
- saving more (55%), with the median commitment an additional $200 a month;
- paying off debt (20%); and
- spending less (17%).
The most popular long-term goals are to:
- save for retirement in an IRA or workplace savings plan (56%);
- save for retiree health care costs (35%); and
- save for college (27%).
The most popular short-term goals are to:
- place the money in an emergency fund (52%);
- save for a vehicle (39%);
- pay down credit card debt (38%);
- save for a home (35%);and
- save for a big-ticket household item (25%).