Instead of resolving to exercise more or finally organize that closet, more Americans are considering financial resolutions to prepare for a market downturn—marking 2023 as “the year of living sensibly.”
Amidst the uncertainty of a potential recession, new Fidelity research finds two-thirds of Americans are considering a financial resolution. Of the financial resolutions, 39% say they want to save more money, 32% are hoping to pay down debt, and 28% want to spend less. Ultimately, Americans are more focused on saving for immediate goals including credit card debt, emergency savings, mortgages, etc., instead of traditional long-term targets like retirement, healthcare, and college savings.
“After the stresses of the last few years, Americans are understandably taking a pragmatic view of their financial situation,” said Stacey Watson, senior vice president of Life Event Planning, Fidelity Investments, in a statement. “This is an encouraging indication of the grit and resilience we can tap into when the financial going gets tough. 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.”
These goals come as more Americans are feeling the financial squeeze of inflation and market volatility, as over one-third of Americans said they are currently in worse financial shape than last year. Additionally, 37% say they had significantly less money this past year due to inflation impacting their day-to-day spending.
Younger generations more likely to make financial resolutions
According to Fidelity research, Millennial and Generation Z Americans are more determined to get their finances in order in the new year. Of the 66% respondents considering a financial resolution, 81% are Gen Z and 77% are Millennials, compared to 67% of those in Generation X and 51% of Baby Boomers.
Not only were younger investors likelier to determine financial resolutions for 2023, but these age cohorts were likelier to express optimism for the new year. Seventy percent of Gen Zers and 78% of Millennials say they believe they’ll be better off financially in the coming year, compared to 65% of Gen Xers and 52% of Boomers. About a quarter of Gen Zers and Millennials dedicate 2023 as the year of “planning ahead,” relative to 20% of Gen X and 15% of Boomers, and over half of the younger cohorts say they actively stay up to date on financial market developments, compared to 45% of Gen Xers and 44% of Boomers.
Older age groups, on the other hand, were more likely to be stressed about their finances in 2022, found Fidelity in their study. Forty-three percent of Boomers and 38% of Gen X say they are in shoddier financial state now compared to last year, relative to 32% of Millennials and 27% of Gen Zers.
State of 2023
Despite the doom-and-gloom, Americans generally believe their relationship with money is on the upswing. Fifty-eight percent cite their relationship with finances as mostly positive, and 65% believe they’ll be better off financially in the coming year. Nearly half (49%) say they will try to maintain the same savings habits they picked up during the pandemic.
A full look of the findings can be found here.
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