A year of sky-high inflation has taken a toll on many Americans' pandemic savings.
The personal savings rate, which measures how much of people's incomes is left over after taxes and regular spending, has been falling since a March 2021 peak of 26.3%. It dropped to 2.3% in October, according to the most recent available data according to the Bureau of Economic Analysis. The savings rate hasn't been that low since July 2005.
But consumers seem to be looking to get back on track in the new year. In fact, 63% of Americans are setting savings goals in 2023, a recent Bank of America survey found.
Generally saving more money was respondents' most popular financial New Year's resolution, with 44% planning to increase their savings. Last year, 44% of Americans said they hoped to save for retirement, but that number fell to 22% this year.
Another 30% of Americans said they want to build their emergency funds specifically.
Aside from saving, paying down credit card debt comes in as the second-most popular financial resolution, with 31% of respondents looking to lower their balances. Another 28% said they hope to travel or go on vacation in the New Year.
While 41% of respondents said they fulfilled their 2022 resolutions, many aren't sure they'll be able to complete them again next year. Though inflation is coming down from its peak earlier this year, it's expected to stay elevated at least through the beginning of next year.
As a result, 77% of Americans who set financial resolutions said inflation may impact their ability to achieve them.
The first step to hitting your goals, though, is to make sure they're realistic, says Mary Hines Droesch, head of consumer and small business products at Bank of America.
"With an uncertain economic outlook for 2023, setting financial goals and saving for bigger purchases can seem daunting," Droesch says. With fears of a coming recession and inflation poised to stick around, goals like getting a raise or spending less on necessities might not be that feasible, by no fault of your own.
But little moves like using a budgeting app or consolidating your accounts into one bank or institution for easier management can make a big difference. "Even the smallest steps can help lead you to achieve your bigger savings and budgeting goals," Droesch says.
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