Getting out of debt is the most common year-end personal financial goal

A new Annuity.org survey looked at which financial habits Americans are most interested in adopting before the end of 2022.

The Annuity.org survey asked 300 participants, “What’s the one personal finance habit you want to start by the end of 2022?” Respondents could choose from four common financial priorities: open an investment account, start an emergency fund, create a monthly budget, or get out of debt.

Survey results

The most popular response, chosen by 29% of respondents surveyed, was to be out of debt. As household debt rose to more than $16 trillion in the second quarter of 2022, it’s clear to see why so many Americans are prioritizing debt relief.

The second most popular financial habit that respondents hoped to accomplish before the end of the year was creating an emergency fund, which was chosen by 21% of participants, while 13% of respondents chose creating an emergency fund. a monthly budget as the first choice. These two habits are the cornerstones of financial well-being because they help you understand where your money is going and save for unexpected expenses.

Another 10% of survey participants said they want to open an investment account in 2022. Investing can help protect your financial future by growing your wealth faster than inflation rises. The earlier you invest, the more time your investment will have to grow.

Finally, 27% of respondents indicated that they had another financial habit in mind or that they did not know what to choose.

Developing the Habits of Financially Successful People

When you’re ready to begin your debt relief journey, start by determining where you are.

“The first step I would recommend you take if you’re trying to get out of debt is to really assess the situation,” said Gerri Detweiler, credit and debt relief expert and educator who spoke to Annuity.org. “Over the years I’ve spoken to many people and they really don’t know for sure how much they owe or what they’re paying in terms of interest rates or total monthly payments.”

But prioritizing debt relief is just one of many ways to promote your personal financial well-being ahead of 2023. There are other simple habits to adopt that can help get you on your way. financial stability.

Johns Hopkins University experts recommend setting financial goals and sticking to them as the first step in creating a personal finance plan. Goals can be big, like buying a house, or smaller, like saving for a new phone or a vacation. Choosing goals that are important to you will motivate you to manage your money more wisely.

There are other habits you can try to help you be more careful with your spending. For example, making a list before you go grocery shopping can help you avoid overspending on things you don’t need.

When creating a budget, set aside money for needs and wants and think about how your regular expenses fit into these categories. You can follow the 50/30/20 rule for budgeting, which allocates 50% of your monthly income to needs and 30% of your income to wants.

Under this method, the remaining 20% ​​is allocated to savings, whether that means putting money into a high-yield savings account or investing it in a retirement account.

Dedicating a portion of every paycheck to savings is a wise financial habit to adopt. Experts advise setting that money aside as soon as it hits your account before it tempts you to spend it instead.