The future looks bright, as many Americans are feeling optimistic about their current and future financial situation, and many plan to take proactive steps to help meet their financial goals.
According to Fidelity Investments’ 2020 New Year Financial Resolutions Study, 82% of Americans say they are in a “similar or better” financial position this year than last and 78% predict they will be better off in 2020.
What’s more, a growing number of Americans intend to continue to be mindful of their money going into the new year, with 67% considering a financial resolution related to saving, investing, managing debt and retirement planning. That’s up from 61% who made a financial resolution for 2019. The top three financial resolutions for 2020 are:
- saving more (53%);
- reducing the burden of personal debt (51%); and
- spending less (35%).
Americans aren’t letting a strong economy take all the credit for their financial success, however. Though the markets have continued to reach new highs, only 18% cite having investments that performed well as a key reason for their success. Most point to good habits as the major reasons for their improved financial situation in 2019, with the biggest being saving more money (47%) and budgeting (29%).
2020 Foresight
Heading into 2020, half of respondents indicate that they plan to increase their annual retirement savings contributions to a 401(k) or IRA. Millennials were at the high end of this query, with 65% saying they plan to increase their contributions, while Boomers were at the low end at 31%. Most respondents (85%) also indicated that they plan to build up their emergency savings.
“It’s encouraging that Americans are committed to building up their finances and taking additional steps toward meeting their financial goals,” notes Melissa Ridolfi, vice president of retirement and college products at Fidelity Investments. “A small step like making a resolution for the New Year can go a long way in forming good money habits that can last a lifetime.”
When asked what motivates them to make financial resolutions, “living a debt-free life” is the biggest motivator (68%), followed by getting control of daily expenses (56%) and having a comfortable retirement (54%). Fidelity notes that this emphasis on debt reduction could have something to do with 28% of respondents saying that one of the biggest financial mistakes they made this year was taking on new debt or adding to existing debt.
As for their top financial concerns for 2020, “unexpected expenses” top the list at 51%, followed by personal debt (38%), not saving enough for short- and long-term needs (36%) and rising health care costs (33%). Not surprisingly, the Baby Boomer generation is the one that is most concerned with unexpected expenses (56%) and rising health care costs (42%).
Fidelity also asked respondents who said they were able to keep their 2019 financial resolutions to share the secrets to their success. Among their top tips were “setting clear, specific and achievable goals” and “learning to enjoy the good feeling of making progress.” “We see how important a sense of gratification can be in helping people stay motivated to reach their financial goals,” Ridolfi emphasizes. “Achieving one small goal can often be the inspiration that leads to even more success down the road.”
Findings in the study are based on a national online survey conducted Oct. 14-23, 2019, by Engine Insights consisting of 3,012 adults.
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