How investors are setting resolutions in 2024 for financial independence
The 2024 New Year’s Financial Resolutions study by Fidelity Investments reveals 54% of Americans are overwhelmed by their finances. More than two out of every five respondents (31%) admitted financial setbacks depleted their emergency savings.
What’s worse, 40% of respondents expressed concerns that their financial struggles may continue in 2024. The good news, however, is that 70% of Americans have elaborate plans to ensure a financially steady and secure 2024.
When it comes to planning financial resolutions for 2024, women are leading the way. Compared to 78% of American men, 83% of women in America believe that having a plan is critical to the effective handling of unexpected financial issues. The younger generations, including Gen Z and millennials, are extremely confident about the year ahead, with over 75% expressing strong belief that their financial state will improve in 2024 compared to 2023.
The study also notes many Americans could not achieve their financial goals for 2023 because of inflation. 40% of respondents claim they had significantly less money to work with because of the severe impact of inflation on their dayto-day expenses. Approximately 32% required budget readjustment plans resulting from the resumption of student loan repayment.
A new approach
92% of Americans with a financial resolution for 2024 say they want to think differently. Taking a lesson from the last couple of years, one-third of the respondents plan to make their finances their top priority. 38% of them have set more conservative financial goals.
52% of Americans will prioritize long-term savings goals in 2024, up from 48% in 2023. Interestingly, there has been a marked difference in savings preferences across gender, age, and race. Figures indicate that short-term savings are still a priority among baby boomers (57%), women (54%), and Hispanic people (51%).
Most Americans still worry about the inflationary environment, as well as the economy. 3 out of 4 Americans are apprehensive about the impact of cost-ofliving increases on their budget.
However, encouragingly, 81% of respondents plan to rebuild their emergency fund this year.
Adopt the right tactics
Regardless of what this year has in store, individuals can improve their financial health and well-being by adopting the right tactics. Some of the most effective financial resolutions for the year include building an emergency fund, budgeting, raising credit score, paying down debt, increasing income by exploring side hustle opportunities, diversifying an investment portfolio, saving for retirement and more.
Looking at the present economic scenario, building an emergency fund is one of the most important financial resolutions for 2024. This emergency fund can be a lifesaver if there is a loss of income or unforeseen expense. Individuals with this financial safety net can have much-needed peace of mind. This economic security demands putting together short-term savings goals and saving money every week for a separate savings account. In the long term, the goal should be accumulating at least three months’ living expenses in the emergency account.
Another important financial resolution is paying down debts and raising credit scores. The top priority should be to pay off all high-interest debts, including outstanding credit card balances. This is one of the quickest ways for an individual to improve their credit score.
Many experts believe that it is crucial right now for all Americans to take steps to increase their income. While cracking the dream job may not be possible for everyone, many side hustles can help grow earnings, and this is why many qualified professionals across America are now exploring these side income opportunities.
Asset diversification has always been critical to remaining protected from market downturns. It continues to be a top priority for many Americans in 2024. Individuals investing in one or two assets should now consider purchasing gold, buying shares in a mutual fund or investing in a Real Estate Investment Trust (REIT) or Exchange Traded Fund (ETF). Investing in real estate can be another excellent option in 2024 and beyond.
More than 50% of Americans believe their retirement savings contributions could be better. Individuals without any retirement savings can explore options such as starting a 401(k) with the employer or opening an individual retirement account (IRA). The aim should be to put at least 10% of pretax income in retirement savings.
Many experts also believe Financial Independence Retire Early, aka FIRE, will remain highly relevant this year. This lifestyle movement is all about extreme saving and investing to retire earlier than the traditional retirement age. To achieve FIRE, it is essential to reduce living expenses drastically, increase income opportunities, and invest the saved money in a mix of regular brokerage accounts and tax-advantaged accounts.
Finally, it is worth remembering that more than having a set of financial resolutions for the year is needed. Often, people start with a lot of commitment but settle back into their old ways within a few months. Therefore, those coming up with financial resolutions for 2024 should find ways to stick to them for the entire year.