Auld Lang (Dollar) Syne
Our besties might not make it out for NYE...but our money would like to crash our New Year’s plans. According to surveys by Wallethub and Fidelity Investments, Americans’ number-one financial goal for 2021 is to save more of it. Bombshell? Hardly. But after the year we’ve had, the urgency behind (and the motivation to keep) this personal finance goal could be historic.
In the Fidelity study, 65% of people surveyed are considering making a money resolution, with younger generations much more likely to be toying with these self-pacts: 76% of Gen Z respondents and 79% of millennial respondents. Forty-four percent of those considering a money resolution said they wanted to save more money. Pay down debt (43%) and spend less money (30%) are the next most popular goals.
When the Covid-19 pandemic collided with the US economy last March, businesses shuttered and legions of workers were left unemployed overnight. Considering only about 23% of Americans had enough money saved to cover six months of expenses — according to a study from this time last year — this meant millions of people were suddenly left struggling to afford housing and other essentials. Months of Lucy-with-the-football stimulus squabbles in Congress certainly, and literally, hasn’t helped.
It might take a hangover the size of 2020 to make this resolution stick. Some 61% of Americans said they’d run out of emergency savings by the end of this year — a stat that makes the “save more money” chestnut feel extra real. So even if the “Roaring 20s” predictions for 2021 come to pass, it’ll be interesting to see if Americans choose growing their cash over splashing out on post-vaccine vacations.
Other key findings?
The Fidelity national online study consisted of 3,011 adults in the US surveyed by third-party firm Engine Insights. Here are some more takeaways:
- 38% said they’ll be in “survival mode” come 2021
- 1 in 6 added “recover from financial losses due to the COVID-19 pandemic” to their top resolutions
- 29% said they’re in a worse financial situation now, up from 19% a year ago
- 68% experienced a financial setback this year (e.g. lost job or household income)
- 72% said they think they’ll be better off in 2021 than they were in 2020
- 77% of those who worked with a financial professional said they stuck to their money resolution in 2020 (compared to just half of those without professional help)
Last year, just 7% of Americans said they stuck to all of their resolutions, according to a YouGov survey. So...how do you keep these things? A simple switch of syntax can help. (So maybe spin “stop wasting money” to a more positive “live within my means, spend $XYZ max every week.”) Talking to Wallethub for its resolutions survey, Tahira K. Hira, econ professor at Iowa State says, “The most important resolution one could make in this area is, ‘I will get to know my real financial self.’...Once we face reality, it is easier to make changes in behavior.”