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It’s been quite an interesting year for the US economy as we are now living in a rising interest rate and inflationary environment after a few years of historically low interest rates during the COVID-19 pandemic. So, as the US consumer is adjusting to this new economic climate, their preferences and goals may be changing, including spending habits and financial goals. Have your financial goals shifted this past year? Does your budget look different ? Are you focusing more on short-or-longer term goals?
Well, if your goals and preferences have changed, you are not alone! We saw an interesting study that found as we head into 2023, many Americans are now focusing on shorter-term financial goals instead of long-term ones. In fact, according to Fidelity’s New Year Financial Resolutions study, surveying 3020 Americans, “more than half ‘53%’ say it’s more important to pay down credit card debt and set aside emergency savings over long-term objectives like retirement and college savings, and roughly half say they’re ready to ‘live sensibly’ or ‘plan ahead’. According to the data from this survey, there is a larger sense of financial pessimism than last year and many reported they feel they are in a worse financial situation than the prior year.
While we know this year has been uncertain and a large adjustment for many with rising interest rates and a higher cost of living, we found this statistic surprising. In a time where individuals are feeling financial doubt, it’s extremely important to seek financial education. Often times, individuals make financial decisions that are not beneficial purely because they are uneducated on the matter. Given this economic uncertainty we are facing and may continue to face in the new year, it’s important to not prioritize short over long-term goals or vice versa, but to make a well diversified plan that includes a way to save for both short and longer-term goals so that you are not derailing one piece of your financial plan.