Fri, 01 January 2021 | pandemic millennials
This year, 65% of Americans are considering a financial resolution for 2021, which is down marginally from last year (67%), but still quite strong given the headwinds experienced by so many families. Younger generations appear to be more committed to actively improving their finances in the new year, with 78% of all Gen Z and Millennial respondents considering a financial resolution compared to 59% of all Gen X and Boomers.
According to Fidelity Investments’® 2021 New Year Financial Resolutions Study, more than two-thirds of Americans experienced financial setbacks in 2020, often from the loss of a job or household income or another emergency expense. Even those lucky enough to maintain their income still may have had to tap savings to help others, as nearly one-in-five attribute their financial setback to providing “unexpected financial assistance to family members or friends.” Despite this, many Americans remain optimistic and determined to make their money work harder in the New Year, with 72% confident they’ll be in a better financial position in 2021.
The fact Americans’ top financial resolutions are consistent with prior years is a reminder that the fundamentals of building financial stability remain consistent in all types of environments. Notably, though, one-in-six respondents this year listed recovering from “financial losses due to the COVID-19 pandemic” as among their top financial resolutions for 2021. When asked what motivates them to make financial resolutions, 56% indicated “greater peace of mind,” demonstrating the critical link between financial and emotional wellness.
The study also provided additional proof regarding the impact COVID-19 has had on families’ financial stability, as nearly one-third (29%) of Americans indicate they are in a “worse” financial situation compared to last year, versus only 19% who said the same in 2019 about the year prior. When faced with financial setbacks in 2020, the most common solutions were to “cut back on other expenses” (45%), “use my emergency savings” (37%), or “take on debt using credit cards or personal loans” (23%). One-in-five “borrowed from friends or family,” with Gen-Z and Millennials most likely to either borrow from or move in with family members.
Looking ahead to the New Year, nearly four-in-ten (38%) say they’ll spend 2021 in “Survival Mode,” meaning they’ll focus on the day-to-day to try to get themselves and their families through the next year. This outlook is more common among older generations (42% and 43% of Gen-X and Boomers, vs. 25% of Gen-Z and 34% of Millennials) and women (42% vs. 34% of men).
Source: Fidelity Investments