It may take a brutal 22 months of a pandemic to do it, but when it comes to personal finance, the new year has a silver lining: 84% of Americans say they’ve stopped worrying about it. have learned what they can do. t control. That bid was just one data point left out of the Fidelity Investments Annual Financial Resolution Study for 2022.
Before we got too excited about these results, the survey was conducted on October 18-24, 2021, long before we all had to learn how to pronounce ommicron. That said, one positive consequence of ending the nearly two-year post-COVID era is that when faced with a financial crisis, we now understand the old adage, “KISS” – or “Keep It Simple Stupid, “Really works. When facing a tough financial crisis, Fidelity respondents said the best solution is to cut expenses (54%) – and then dip into those precious and important emergency savings (39%). Notably, the survey also found that compared to last year, stress levels — which keep people awake at night — “have dropped significantly.”
We don’t know why the financial stress is easing, but the government’s massive stimulus efforts have helped immensely. Rising economic growth and abundance of job opportunities along with additional money has helped many people to overcome money concerns. The combination has also boosted our general mood, with 72% of respondents believing they will be in better financial shape in 2022 and six in 10 Americans optimistic about the future. Despite a more upbeat outlook, Americans remain concerned about rising prices, with respondents citing inflation as the top concern for 2022. For workers, it’s time to ask the boss for a pay raise. It is a tight labor market, with 11 million job opportunities, meaning that power has shifted from employers to workers. To use newfound leverage, research your industry and your specific job to find out what people like you earn. Respectfully ask your boss if he can do better for you and if not, it may be time to look for another position.
For retirees, it’s more difficult, because while you’ll see a 5.9% increase in Social Security benefits, Medicare Part B, which covers doctors and outpatient care, will increase by 14.55%. As a result, 2022 may not be a great year to help those adult children.
Finally, one aspect of what’s new in 2022 is what’s not new. Diane Swonk, Grant Thornton’s chief economist, said, “Living during a pandemic is like Bill Murray’s character in the 1993 film Groundhog Day. As we emerged from the first wave of infections and lockdowns hoping to return to the world, we only felt To be left behind is that we are entering a loop of recurring infections and disruptions, which proved difficult to avoid.”
As the world adjusts to yet another edition, it is time to address financial propositions in a more informed manner. The COVID period has provided a crash course in identifying financial priorities, and it has also shown us which expenses are important and which are not. When I talk about resolutions, I usually keep my “big three” (1) in an emergency reserve fund that can cover 6-12 months of your living expenses (2) credit cards or Reduce other high-interest debt, and (3) fund retirement plans to the best of your ability, especially if you have a company match. Until the pandemic, I advocated equal weight for each of the three, but what’s new in 2022 is that funding to the emergency reserve should take priority over the other two.
Jill Schlesinger, CFP, is a business analyst for CBS News. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at firstname.lastname@example.org. Check out his website at www.jillonmoney.com.