3 in 4 Americans With 2023 Financial Goals Are Confident They’ll Make Progress This Year
Many Americans are already trying to keep a close watch on their personal financial health: 54% of adults said they check their credit scores at least monthly, and 73% do the same for their investments.
Younger generations, meanwhile, are most likely to have entered the new year with targets to improve their finances in 2023.
Millennials, Gen Zers Are Most Likely to Have Made Financial Goals for 2023
The beginning of a new year is typically a time for people to set financial goals and make budgets for the months ahead.
Jesse Mecham, the founder of You Need a Budget, a personal budgeting and education application, has seen an uptick in demand for the company’s budgeting tools this season.
“Last year, it was almost like crickets for people with New Year's resolutions,” he said.
But after a year of economic turmoil — U.S. consumer prices rose at a rate of about 7% in 2022, while the S&P 500 posted its worst yearly performance since 2008 — the public appears especially eager to turn the page on its financial fortunes in 2023.
Financial targets for 2023 start with proper budgeting
According to the Morning Consult survey, developing and maintaining a budget is the No. 1 priority for U.S. adults who set financial goals for 2023. Creating an emergency fund and evening out spending on a monthly basis weren’t far behind.
In his experience at You Need a Budget, Mecham said many clients find that creating a budget allows them to become aspirational about their finances.
“It's fun to see people deploy the same amount of resources, but do it in a way that lines up with what they truly care about,” he said. “And suddenly they are reaching their goals.”
Following a Budget Is the Top Priority This Year for U.S. Adults Who Set Financial Goals
You Need a Budget’s client base is typically middle- and higher-income individuals, Mecham noted, but those two groups have similar concerns when it comes to managing their money: “They're all feeling like: ‘Gosh, what do I have to show for this? I don't feel like I'm getting ahead, I feel a little bit out of control.’”
When asked how difficult they felt it would be to achieve their financial goals in 2023, adults across income levels reported fairly similar outlooks. Among those in households making less than $50,000 per year, 67% said they thought they would have difficulty, while 66% of those in the $50,000-$100,000 group and 58% in households making more than $100,000 said the same.
Žiga Vižintin, founder of the Irrational Retirement Blog, noted that consumers’ own biases can derail their goals and intentions, especially when it comes to taking actions that may not yield rewards until further down the road.
Optimism bias especially can cause people to overestimate the likelihood of good things happening and underestimate the likelihood of bad things happening, he said, which can impact behaviors like setting aside money for an emergency fund.
And taking the first steps toward change can be overwhelming, as well: When it comes to a goal like starting a retirement fund, consumers must decide “which product will you choose, which provider, how much you will save every month, how much can you afford, where to invest,” Vižintin said. “And all this just turns you off and the easiest is to do nothing.”
2022 struggles seem to inform 2023 targets
Many consumers’ goals for 2023 align with their reported financial struggles in 2022. For half of respondents, creating an emergency savings cushion and reducing their debt were challenging last year. In the past few years, Americans had built up record savings due to both payments from the federal government in response to the COVID-19 pandemic and decreased spending amid lockdowns, but that progress may be dissolving.
A study published in October by Federal Reserve researchers said that the driver of excess savings accumulation for households in the top 25% of income was due to reduced spending, while savings gains for the bottom half of households was due to the federal stimulus payments. The researchers suggested that households have since burned through about a quarter of those savings gains, and the savings rate has now fallen below pre-pandemic levels.
In the open-ended responses to the Morning Consult survey, many simply noted “saving” when asked what financial challenge they faced last year. One woman, a baby boomer in a household making less than $50,000 a year, said that in 2022, she struggled with “being able to put money in the savings and still get together with friends for breakfast or lunch.” Another woman, a boomer in the middle-income group, said her biggest challenge was “having to deplete our savings to get by.”
The State of the Public’s Financial Struggles in 2022
Respondents in the survey had a lot to say about the impact of rising prices on their goals, as well. A millennial man in a household making more than $100,000 a year said his biggest challenge last year was “raising 2 children and being able to afford daycare and food.”
Another millennial man, in the middle-income group, said he works in sales and logged longer hours last year to keep up with cost-of-living increases. “I struggled to make the amount of money I made last year, and found myself slowly getting behind on bills and such,” he wrote.
But for many, just keeping their head above water financially was considered a win. A Gen X woman in the lower-income group said her financial successes last year included “just being able to get through the year being able to pay bills.”
Among Gen Z respondents, the achievements in 2022 were often about making progress on the basics; many named getting a job as a success in 2022. And one Gen Z man in the under $50,000 income group said he “finally was able to start some credit and get a credit score.”