Americans are feeling a bit more hopeful about the upcoming year, according to Fidelity Investments’ 2022 New Year’s Financial Resolutions Study.
This year, more than 6 in 10 (62%) Americans feel optimistic about the future, despite the unknown and 72% are confident they’ll be in a better financial position in 2022.
Some of this financial success, ironically, may be attributed to the pandemic, the survey noted. In fact, respondents discovered several surprising silver linings these past two years, with “becoming more thoughtful about saving and spending” topping the list (42%), followed by “becoming closer to family” (39%) and “becoming stronger as a person” (34%).
This thoughtful approach to finances is carrying through in the new year, with a more practical view toward financial resolutions: 38% of participants overall are considering more conservative goals, a number that is even higher (46%) among the next generation.
By far, the prevailing sentiment is cautious optimism, with almost one-third (32%) of participants characterizing 2022 as a year of hope. This sentiment is echoed in how many families feel about their financial stability, the survey noted.
This year, 34% say they are in better financial shape (up from 29%), compared to 24% in worse shape (down from 29%). For those in better shape, the top reasons given were things within their control—saving more, budgeting better, and working more hours.
For those participants looking to save more in 2022, the objectives are somewhat split—51% plan to save for the long term, while 49% are looking at shorter-term objectives, such as boosting emergency savings 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%).
“It’s encouraging to see so many Americans feeling optimistic about their financial situation, with 72% confident they’ll be in a better financial position in 2022,” according to Stacey Watson, senior vice president of Life Events Planning at Fidelity Investments. “This may be the result of achieving success this past year with goal-setting. The study suggests financial actions taken at the start of the pandemic out of necessity, such as budgeting better and building up an emergency savings fund, have now become permanent habits for many."
As a result, many more Americans were able to stick to their financial resolutions for 2021 than the year before and are feeling good about it. In fact, the top response when Fidelity asked respondents if they discovered any silver linings these past two years was: “becoming more thoughtful about saving and spending.”
Top Financial Resolutions
Perhaps as a result of this optimism, almost 7 in 10 (68%) respondents are making financial resolutions for the New Year.
And what are some of these resolutions?
“Even after unprecedented financial challenges for families not seen since the Great Recession, this year’s study shows saving more, paying down debt and spending less still top the list of financial resolutions, Watson said. “This has held true for the last 13 years we’ve done this study. With more Americans learning to let go of what they can’t control and instead focusing on things they can control, like saving more and budgeting better, it’s no surprise that these three resolutions continue to resonate and take priority.”
Building Better Client Relationships
For advisors, the New Year is a good time to check in with clients about their financial goals and see how those goals align with their financial plan, both in the short-term and long-term, Watson said.
“Our study shows that those with an advisor were able to stick with their 2021 financial resolutions at a much higher rate than those without one,” she added. “By helping clients set clear and specific milestones to achieve their resolutions, advisors can help their clients better prepare for the unexpected, build confidence in their financial future, and achieve peace of mind.”
Perceived Storms On The Horizon
Despite the optimism cited by participants, there are several perceived storm clouds on the horizon, one of which has been observed this past year, according to the survey. For those who report being in worse financial shape in 2021, the No. 1 reason given was inflation. In fact, 4 in 10 respondents cited inflation as the cause, compared to only 27% in 2020. This is also the top concern for 2022.
Significantly, if a financial setback occurs, sensible solutions are holding sway. Rather than raiding the retirement account or taking out loans, Americans indicate their top solutions would be to cut back on other expenses (54%), followed by dipping into their emergency savings (39%), according to the survey.
This study presents the findings of a national online survey, consisting of 3,031 adults. Interviewing for this CARAVAN® Survey was conducted October 18-24, 2021, by ENGINE Insights, which is not affiliated with Fidelity Investments.
Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as Editor-In-Chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]