Four in five Americans in a new survey said they were in a similar or better financial position this year than last year, and remain committed to improving their financial position in the New Year, Fidelity Investments reported Monday.
The survey suggested that a vibrant stock market and low unemployment have likely fueled Americans’ confidence, but most respondents pointed to good habits as the major reason for their improved financial situation in 2019, with 47% citing saving more money and 29% budgeting.
In addition, a quarter of survey participants said they were getting ahead because they had been able to work more hours. Only 18% pointed to strong investment performance as a key reason for their success.
Americans in the survey exhibited a strong desire to keep this positive momentum going into the new year by continuing to be mindful of their money in 2020. Sixty-seven percent said they were considering a financial resolution related to saving, investing, managing debt, budgeting and retirement planning, compared with 61% who made a financial resolution for 2019.
Among those who said they were contemplating a resolution for the new year, 53% wanted to save more, 51% to pay down debt and 35% to spend less.
How serious were these likely resolution-makers? One indicator: 84% said they would rather save $5,000 than lose five pounds.
“It’s encouraging that Americans are committed to building up their finances and taking additional steps toward meeting their financial goals, with 50% saying they plan to increase their annual retirement savings and 85% planning to build up emergency funds,” Fidelity Investments’ vice president of retirement and college products, Melissa Ridolfi, said in a statement.
“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.”
Caravan Survey conducted an online poll in October among 3,012 boomers, Gen Xers, millennials and Gen Zers.
Thirty-eight percent of survey participants said their personal debt was a top concern heading into 2020. Indeed, a debt-free life was the chief motivator for making financial resolutions for 68% of respondents, followed by 56% who wanted to get control of daily expenses and 54% who had their eyes on a comfortable retirement.
Fidelity Investments said this emphasis on debt reduction may be explained by the fact that 28% of respondents said adding to existing debt or taking on new debt during the past year had been a big financial mistake or had resulted in a major setback.
For baby boomers, at least, focusing on debt had a silver lining. Twenty-nine percent credited being in a better financial situation this year than last because they had refinanced, paid off or reduced debt or loans. This compared with 21% of Gen Xers, 19% of millennials and 6% of Gen Zers.
“Boomers are getting the message that the closer they get to retirement, the more essential it becomes to get their debt under control to make the most out of retirement savings,” Ridolfi said.
Other Survey Findings
Unexpected expenses topped the participants’ list of financial concerns in the new year — not surprising, Fidelity said, given the desire of so many to gain more control over their finances. It noted that financial concerns relating to factors within a person’s control included credit card debt and not saving enough.
Besides taking on too much debt, researchers asked respondents about other common financial mistakes or setbacks during the past year. Thirty-three percent purported not to have made any big mistakes this year. The most commonly cited small one was dining out too much.
Making a resolution is one thing, keeping it is another. Here are the tips on how to do so by those who reported that they had successfully kept theirs in 2019:
- Set clear and specific goals: 51%
- Set realistic goals that are easy to maintain long term: 48%
- Set smaller milestones along the way to stay motivated: 41%
- Keep a record of your progress against your goal: 39%
- Enjoy the feeling of making progress to help stick with it: 37%
“We see how important a sense of gratification can be in helping people stay motivated to reach their financial goals,” said Ridolfi. “Achieving one small goal can often be the inspiration that leads to even more success down the road.”