Survey: Inflation, Interest Rates Seen as Spoilers for 2024 Financial Resolutions

With the new year comes goal-setting and resolutions, but respondents to the Motley Fool Ascent's Financial New Years Resolution survey are worried that high interest rates and inflation could play spoilers to their financial goals for 2024.

Despite that, most respondents who plan to make a financial resolution for the new year are confident they'll be able to keep it.

Different generations have different financial goals for the new year. Older Americans are more focused on saving for retirement, while younger generations lean toward saving for big purchases or increasing their investments.

Read on for a deeper dive into how Americans are thinking about financial goals and New Year's resolutions for 2024.

67% of Americans plan on making a financial resolution for the New Year

Two-thirds of survey respondents plan to make a 2024 financial resolution for the new year.

That's roughly the same percentage of respondents who planned to make a resolution in the Motley Fool Ascent's 2023 Financial New Year's Resolutions survey.

Millennials and Gen Z are most likely to make 2024 financial New Year's resolutions

Younger generations are more likely than older generations to make financial New Year's resolutions.

Our survey found that 82% of millennials and 74% of Gen Zers plan to set financial goals for the new year, compared to 69% of Gen Xers and just 49% of baby boomers.

That's consistent with the 2023 issue of the Motley Fool Ascent's Financial New Year's Resolution survey.

Younger generations may be more inclined to set money goals for the new year given that they're generally earning less, saving less, and investing less than older generations. They're less likely to have made big purchases, like a home or new car, and are more likely to have less savings for a retirement or emergency fund.

Do you plan on making a financial New Year's resolution?

Inflation, interest rates seen as barriers to financial New Year's goals

While 71% of respondents are confident they'll be able to keep their financial New Year's resolutions, most are worried about inflation and interest rates:

• 85% of respondents with a financial New Year's resolution think inflation will make it harder to keep their resolution.
• 80% of respondents with a financial New Year's resolution think higher interest rates will make it harder to keep their resolution.

Although inflation cooled over the course of 2023, it's still top of mind for respondents -- which suggests Americans are still struggling with the new, higher prices throughout the economy. Inflation was a concern for 81% of respondents to last year's survey.

Interest rates have risen steadily since January 2022 and are now a top concern for respondents setting financial goals for the new year.

Higher interest rates from the Fed leads to higher interest rates on credit cards, auto loans, mortgages, and other types of loans. It can also lead some banks to offer higher interest rates on savings accounts.

Even though higher interest rates can sound scary, it's not all doom and gloom for financial goals in the new year. High interest rates can make resolutions around big purchases, like a car or home, less attractive and more expensive over the long run, but could make resolutions involving saving a bit easier.

The most common cause for pessimism about financial New Year's resolutions: They'll become too expensive to keep

Among respondents pessimistic about keeping their financial New Year's resolution, 52% think it will become too expensive to meet their goals.

That's no surprise given the level of concern about inflation and interest rates. Respondents last year were also most likely to be pessimistic about their financial New Year's resolutions due to how expensive they could be.

Another 25% think they won't be able to form the habits necessary to hit their financial goals in 2024.

Why aren't you optimistic about keeping your financial resolution for the upcoming new year?

Why were you unable to keep last year's financial resolution?

The top reasons respondents were unable to keep their previous years' financial New Year's resolutions all have to do with cost.

The most common reason was that it simply became too expensive to hit their goals.

The second-most common reason was that respondents weren't financially prepared to both hit their New Year's goals and keep up with other costs, like supporting their family.

The third-most common reason was that respondents weren't able to maintain the habits required to meet their goals -- a top concern among respondents who are worried about their upcoming financial New Year's resolutions.

Paying off debt is the top goal among respondents with financial resolutions

Paying off debt tops the list of goals for this with a financial New Year's resolution. That was the top goal last year as well, and it's no surprise that it remains there going into 2024. Total household debt has risen to a record level.

Saving for a significant financial milestone like a house, car, or wedding was the second most selected goal for 2024 among respondents, followed by saving for a large purchase like a vacation or new piece of tech.

Eleven percent of respondents with a financial New Year's resolution for 2024 said their aim was to boost their income.

More fundamental financial goals like building emergency savings, investing more, and saving for retirement were each selected by less than 10% of respondents as financial objectives for the new year.

2024 financial New Year's resolutions by generation

Financial New Year's goals for 2024 vary by generation, among respondents:

• Baby boomers are more likely to want to pay off debt than any other generation. Gen Z are least likely to have paying off debt as a goal.
• Baby boomers are least interested in saving for a significant financial milestone or large purchase, but are most likely to want to build an emergency savings fund or save more for retirement.
• Inversely, younger generations are more likely to want to save for a financial milestone or large purchase, but are less interested in building an emergency savings fund or saving for retirement.
• Gen Z are most interested in boosting their income in 2024.

New year, new money goals

Many Americans use the new year to set new financial goals. Nearly all financial New Year's resolutions tend to be long term. They are goals that are realized over months, if not years, and require commitment of both time and money.

Given that, here are some tips that may help along the way.

1. Plan to save by trying an emergency fund calculator.
2. Make use of debt payoff calculators.
3. Try other financial calculators to improve your financial knowledge.
4. Save time by automating savings transfers.
5. Try setting up recurring investments with your brokerage account.
6. Look into a balance transfer credit card to wipe away credit card interest and make paying off credit card debt more manageable.

Of course, even the best New Year's resolutions can be tough to keep and unforeseen circumstances can get in the way. Simply making a resolution and sticking with it for as long as you can, even if you don't meet all your goals, can make a difference.

Methodology

The Motley Fool Ascent surveyed 2,000 American adults via Pollfish on Nov. 7, 2023. Results were post-stratified to generate nationally representative data based on age and gender. Pollfish employs organic random device engagement sampling.