Studies show that while some individuals are focusing on improving their finances in 2022, many are passing on making New Year’s resolutions.
A consumer research survey from Voya Financial reveals that nearly one-third (31%) of Americans say they are not planning to make any New Year’s resolutions in 2022.
Fidelity Investments’ “2022 New Year’s Financial Resolutions Study” shows Americans were successful with their goal-setting in 2021. And greater numbers of people report being able to stick to resolutions in 2021 in all areas than in 2020; notably, 71% of respondents were able to stick with their 2021 financial resolutions, up from 58% in 2020.
“This study confirms that actions taken at the start of the pandemic—such as budgeting better and replenishing that emergency savings fund—are becoming permanent habits for many. Americans are connecting their new perspective on well-being to the way they approach their finances and, as a result, becoming more thoughtful about saving and spending,” says Stacey Watson, senior vice president of life event planning at Fidelity Investments.
Some of this financial success, ironically, may be attributed to the pandemic. Respondents to the Fidelity study reported several 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%). Fidelity says this aligns with what it has observed among its clients, as the company has seen 1.6 million households engaged in planning interactions with Fidelity in the second quarter of 2021 alone, a 24% increase over the same period.
Heather Lavallee, CEO of wealth solutions for Voya Financial, says Voya is seeing a shift to more positive savings behaviors in its data as well. “More than 60% of Generation Z and Millennial workers who changed their savings rates in their workplace retirement plan during the third quarter of 2021 increased their contribution,” she says.
For Fidelity survey respondents who reported that they are making financial resolutions this year, some of the top reasons given were to achieve greater peace of mind and live a debt free life. But beyond hopes, the research suggests the simple act of making a resolution may actually have a transformative effect, Fidelity notes.
While resolutions are an important start, the goal is to keep good financial routines going strong well beyond January—and have them become lifelong habits. Based on suggestions from those who were successful in keeping resolutions this year, the key to success is the feeling good about making progress and setting clear, specific financial goals. Further, 86% of all respondents felt having a plan in place can help them better deal with the unexpected. For those who work with a financial professional, it can be helpful to set clear and specific financial goals with that person, to help set realistic milestones to achieve those goals—and ultimately, secure greater peace of mind.
“It’s amazing that taking the one relatively simple step of setting a goal can help you feel better about the direction you are headed, but this has been proven to be the case time and again,” Watson says. “Once you’ve set a goal, take the time to develop a plan for how to achieve it.”
New Year’s Resolutions Address Multiple Priorities
Nearly two years into the COVID-19 pandemic, many Americans might be seeking to refocus their priorities, Voya’s survey revealed. When asked specifically what resolutions individuals do plan to make in 2022, more than half (60%) noted an interest in improving their overall well-being, with 44% noting a focus on physical health and 31% on their mental health.
Resolutions also aren’t isolated to simply financials for the nearly seven in 10 (68%) respondents to the Fidelity study who are making financial resolutions for the new year. Across the board, Americans indicate they are also making resolutions with physical and mental health objectives at higher levels than in the past year.
The Voya study shows the financial impact many individuals felt from the pandemic still remains a reality, however. As a result, many who are planning to make resolutions noted that they plan to have a stronger focus on financial changes in 2022. A large number of individuals say they are likely or extremely likely to save more for emergencies (76%), reduce or pay down their overall debt (72%) and save for retirement (72%). These numbers are even higher for those generations that might have been more impacted financially during the pandemic, with Generation Z (89%) and Millennials (83%) noting that they are likely or extremely likely to save more in general.
When it comes to financial resolutions, 38% overall are considering more conservative goals, a number that is even higher (46%) among respondents ages 18 to 35, Fidelity reports. For those 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 those ages 18 to 35, 62% plan to increase their retirement contributions in the year ahead, at a far higher level than older Americans (34%).
The Fidelity survey found that if a financial setback occurs, sensible solutions are holding sway. Rather than raiding their 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%). This is consistent with what Fidelity is seeing in retirement accounts, with a steady decline in savers taking out 401(k) and 403(b) loans.
Voya found that as individuals continue to focus on building back savings and improving their overall financial well-being, many also appear to be seeking support from their employer to help them get back on track. When asked about the importance of employer-offered benefits, the survey revealed that a majority of individuals rank the following benefits as important or extremely important: employer-sponsored retirement savings (82%); flexible work hours (77%); mental health benefits (72%); short-term/long-term disability income insurance (76%); and whole life or term life insurance (69%).
“With these findings in mind, and for those employers who are looking to help their employees as we approach the new year, we recommend considering reminding employees of the benefits and resources that are available to them at the workplace, whether that may be an employee assistance program [EAP], a resource for helping with elder or child care, or making the most of their benefits to achieve those more financially focused resolutions,” says Rob Grubka, CEO of health solutions for Voya Financial. “The reality is that we often find many individuals don’t recognize how many great resources are available to them—and many without cost—directly from their employer.”