Becoming Debt Free Is Most Common End-of-Year Personal Finance Goal

A new Annuity.org survey examined which financial habits Americans were most interested in starting before 2022 comes to a close.

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: opening an investment account, starting an emergency fund, creating a monthly budget or becoming debt-free.

Survey Results

The most popular answer, chosen by 29% of surveyed respondents, was becoming debt-free. With household debt increasing to over $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 respondents hoped to accomplish before the year is over was starting an emergency fund, which was chosen by 21% of participants, while 13% of respondents selected creating a monthly budget as their top choice. Both habits are cornerstones of financial wellness, as they help you understand where your money is going and save up for unexpected expenses.

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

Finally, 27% of respondents showed they had another financial habit in mind or that they weren’t sure what to choose.

Developing Habits of Financially Successful People

When you’re ready to begin your debt relief journey, start by figuring out where you stand.

“The first step I would recommend you take if you’re trying to get out of debt is really assessing the situation,” said Gerri Detweiler, a credit and debt relief expert and educator who spoke to Annuity.org. “Over the years, I’ve talked 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 wellness before 2023. There are other simple habits to adopt that can help set you on the path towards financial stability.

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

There are other habits you can try to help you be more mindful of your spending. For example, making a list before you go to the grocery store can help to avoid spending too much on things you don’t need.

When creating a budget, set aside money for needs and for wants and think about how your regular expenses fall into those 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 towards wants.

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

Setting aside a portion of each paycheck towards savings is a wise financial habit to adopt. Experts advise putting that money away as soon as it hits your account before it tempts you to spend it instead.

Please seek the advice of a qualified professional before making financial decisions.