As the country withstands uncertain times, Americans are feeling less-than-optimistic when it comes to the year ahead and many plan to focus more on short-term needs, rather than long-term goals, according to a new study by Fidelity Investments.
The firm’s 14th Annual New Year’s Financial Resolutions Study finds that, of those planning a financial resolution for the new year, 94% say they’re approaching it differently given events of the last couple of years, focusing on the practical even more so than in the past — and nearly half (45%) are considering more conservative goals for the year ahead.
This comes as more than a third of respondents say they’re in a worse financial situation than last year and only 65% believe they’ll be better off in the coming year — versus 72% in the last study.
Notably, for the first time in the study’s 14-year history, more Americans plan to save money for short-term goals rather than long-term goals as part of their New Year’s resolution. Next-generation savers are evenly split, with 50% saving for the short-term and 50% looking longer. Yet, despite this new mindset, the top resolutions remain consistent with past years: save more money (39%), pay down debt (32%), and spend less money (28%).
“After the stresses of the last few years, Americans are understandably taking a pragmatic view of their financial situation,” says Stacey Watson, senior vice president of Life Event Planning at Fidelity Investments. “Given the ups and downs experienced, being creative and establishing new financial wellness habits are positive signs many are finding ways to shift the focus, to pay down debt or build up emergency savings. Proper planning and balance, are key.”
Inflation’s Impact
The record-high inflation of the last year has made its presence known in Americans’ wallets and their minds. For those in worse financial shape than last year, more than half (58%) attribute this to inflation. Moreover, inflation was cited as the top financial setback experienced in 2022, and its impact is expected to continue, as respondents ranked it their top financial concern for 2023.
Among those experiencing a financial setback in the past year, 44% had to dip into their emergency fund. Somewhat surprisingly, Baby Boomers led the way in indicating they are in worse financial shape, possibly due to declining retirement balances, with more than 4 out of 10 (43%) saying they and their family are in worse shape.
Positive Practices Prevail
While 2022 presented challenges, the study also reveals encouraging news: more people express having a positive relationship with money than negative. And among those making financial resolutions, the top motivations remained consistent year-over-year: achieving “greater peace of mind” and “living a debt-free life.”
When asked to describe their expectations for 2023, 29% described their outlook as “the year of living sensibly.” Encouragingly, nearly half (49%) expect to maintain the savings habits they’ve picked up during the pandemic. Some of the top things Americans are trying to do for themselves in 2023 include taking the time to exercise more, spending time with those they love, worrying less, and focusing on things that truly matter.
Fidelity also observes that those in better financial shape this year reported saving more, budgeting better, and/or working more hours. More than 8 in 10 Americans say having a plan in place can help them better deal with the unexpected.
“Even if the focus for now is understandably on more immediate needs, our long-term goals and objectives are what keep us going — and planning can help,” added Watson. “Taking charge of your financial situation is a great way to help you feel a sense of control, even when external forces bring challenges.”
The study is based on findings of a national online survey of 3,020 adults, conducted October 17-23, 2022, by Big Village, which is not affiliated with Fidelity.
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