FINANCIAL NEW YEAR’S RESOLUTIONS ARE GOOD FOR YOU
Ready to hit the reset button on your financial life?
If so, you’re not alone. The number of Americans making New Year’s resolutions involving their personal finances rose sharply from the year before, according to an annual survey by Fidelity Investments. The poll, whose results were released this month, found 37% pledging to improve their financial wellbeing in the months ahead, up from 31% a year ago.
The reason is simple, according to Ken Hevert, senior vice president of Retirement at Fidelity. “Periods of economic uncertainty tend to be a reminder about why having a financial plan—and sticking to it—is important,” he says.
The leading financial resolutions include saving more (54%), spending less (19%) and paying off debt (16%). Paying down credit card debt hit 11%, more than twice last year’s level (5%).
Economic concerns, market volatility and seeking greater financial security all likely contributed to the uptick in good intentions. The top worries were focused on unexpected expenses (62%), the economy (53%) —including global instability, market volatility and interest rate changes— and health care costs in retirement (47%).
Retirees’ health care costs loom large for a reason—on average, a couple both 65 and retiring this year can expect to spend a whopping estimated $245,000 on health care throughout retirement, up from $220,000 the year before, according to Fidelity.
But regardless of their outcome, just making a plan and resolving to improve financial well-being seems to have big benefits , if only for your mental health. Those who made financial resolutions at the beginning of 2015 were more likely to be more optimistic and feel more financially secure, according to the survey.
It found 51% of those who made 2015 New Year resolutions “feel strongly they will be better off financially in 2016,” vs. 38% of those who didn’t agreed with that statement.
And 45% of those who made 2015 New Year resolutions say “they are less in debt this year compared to last year” vs. 33% of those who didn’t make a resolution.
“Committing to financial goals such as saving more and paying off debt can have a tremendous impact over time on the well-being of a household,” says Hevert, “which may be why people who make resolutions on money matters tend to feel better about financial wellness than those who don’t.”
No surprise, sticking to the plan leads to an even better result:
Of those who nearly or completely achieved their 2015 resolution, 56% said they were in a better financial situation a year later, versus 34% of those who didn’t hit their goals.