The pandemic has wreaked havoc on the global economy and the repercussions have caused the majority of Americans to report experiencing a financial setback as a result, according to new research.
More than two-thirds of Americans experienced some level of economic hardship this year, according to Fidelity Investments’ 2021 New Year Financial Resolution study released Tuesday.
The economic volatility is still evident, causing four in 10 (38%) respondents to say they’ll be spending 2021 in “survival mode,” meaning they’ll focus on getting themselves and their families financially stable through the next year.
Surviving the pandemic was a common theme among older generations like Gen-X and Boomers, compared with Gen-Z and millennials. Moreover, 42% of women are likely to focus on financial stability in 2021 compared with 34% of men.
The good news it that the downturn also fueled younger generations to commit to improving their finances heading into 2021. In fact, younger investors appear to be more committed to actively improving their finances in the new year, with 76% of Gen Z and 79% of millennial respondents considering a financial resolution compared to Gen X (67%) and Boomers (51%), according to the study which surveyed more than 3,000 adults in mid-October.
Still, the majority of Americans (65%) are considering a financial resolution heading into 2021, with top priorities being to save more money (44%), pay down debt (43%), and spend less money (30%).
These priorities are in line with prior years — proving that the fundamentals of building financial stability remain consistent in all types of environments, said Stacey Watson, senior vice president with oversight for Life Event Planning at Fidelity Investments.
“This year’s top financial resolutions are consistent with what we’ve seen in the past, however, what makes 2021 unique is how people will achieve them, given the financial pressures and major life events many continue to experience throughout the pandemic,” Watson said.
Notably, one-in-six respondents this year listed recovering from “financial losses due to the COVID-19 pandemic” among their top financial resolutions for 2021. When asked what motivates them to make financial resolutions, 56% indicated “greater peace of mind,” demonstrating the link between financial and emotional wellness.
The opportunity for advisers to embrace financial planning as their value proposition is evident as more than three-quarters (77%) of people with a financial professional reported they were able to stick to their financial resolution in 2020, compared to just half (50%) of those without one.
Notably, women are also less likely than men to think they will be better off in 2021 than they were in 2020 (69% of women compared with 75% of men). This outlook is a result of more women having lost a job or household income this year compared with men.
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