Need financial peace of mind? Set a financial resolution for the new year
Posted: December 26, 2021 | Word Count: 690
Americans are feeling more hopeful about the upcoming year, at least when it comes to their finances. This year, more than 62% of Americans feel optimistic about the future despite the unknown, which includes concerns about inflation and rising costs. In addition, 72% are confident they'll be in a better financial position in 2022, according to Fidelity Investments' 2022 New Year's Financial Resolutions study. Among the next generation, those ages 18-35, this number is even higher, at 81%.
"The country has been through a seemingly unrelenting roller coaster over the past two years. It's encouraging to see people feeling more hopeful and placing a priority on themselves," said Stacey Watson, Head of Life Events Planning at Fidelity Investments. "Actions taken at the start of the pandemic — such as budgeting better and replenishing that emergency savings fund — are becoming permanent habits for many."
Almost one-third of study respondents described 2022 as a year of hope. This prevailing sentiment of cautious optimism is echoed in how many families feel about their financial stability. This year, 34% of respondents feel they are in better financial shape compared to last year; last year, only 29% could say the same. Perhaps as a result of this feeling of hopefulness, 68% of Americans are considering financial resolutions for the new year.
Making a financial resolution
The most popular goals for those considering a financial resolution are saving more money, paying down debt and spending less money. Some of the main reasons people gave for making financial resolutions were to achieve greater peace of mind and live a debt-free life.
Beyond hope, the research also suggests the simple act of setting a resolution may have a transformative effect. More people who made financial resolutions at the start of 2021 say they are in better financial shape now compared to those who didn't make financial resolutions. They're also more optimistic about the future—and 39% feel strongly that they will be better off financially in 2022 (compared to 15% of those who did not make a resolution).
For those looking to save more in 2022, the objectives are somewhat split. According to the study, 51% plan to save for long-term goals, while 49% aim at short-term targets like boosting emergency funds or saving for a mortgage. Among the next generation, 62% plan to increase their retirement contribution in the year ahead at a far higher level than older Americans (34%).
And what do people say they want to do once they've paid off the bills and set aside money for the future? Americans are looking to get away if it's safe to do so, as travel tops the list for where people plan to spend their extra dollars.
Staying the course
While resolutions are an important start, the real goal is to keep good financial routines going strong well beyond January, so they become lifelong habits. Based on suggestions from those successful in keeping resolutions in 2021, to increase the likelihood of success, you should set:
1. Realistic goals
2. Clear and specific goals
3. Smaller milestones to stay motivated
As you achieve your objectives, remember to enjoy the feeling of making progress, so you stay motivated to reach your goals.
"Simply taking the one relatively simple step of setting a goal can help you feel better about the direction you are headed. This has been proven time and again," said Watson. "Once you've set a goal, take the time to develop a plan for how to achieve it. The good news is, there are several free resources out there to do just that, which can be helpful — especially for those whose resolution is to spend less in 2022."
Working with a financial professional can be helpful. They can help you set clear and specific financial goals and realistic milestones, providing you with greater peace of mind. Fidelity can help you create a free plan based on what matters most to you, whether that's saving for retirement, college, an emergency fund or even that vacation you've been waiting to take. You can adjust your plan as your priorities evolve. It all starts with setting a goal. Visit Fidelity.com/FreePlan to get started.