For the first time in over a decade, more Americans are prioritizing short-term financial goals over future ones going into the new year.

More than half (53%) of Americans say it’s more important to pay down credit card debt and set aside emergency savings over long-term objectives like retirement and college savings, according to Fidelity’s New Year’s Financial Resolutions study, which surveyed 3,020 Americans. And roughly half say they’re ready to “live sensibly” or “plan ahead.”

The pragmatism, though, underscores a growing pessimism going into 2023, with a smaller share saying they’ll be better off in the coming year (65% this year vs. 72% last year) and more than a third reporting they’re in a worse financial situation than last year.

“The optimism from last year has abated, replaced by concerns about inflation and market volatility,” Stacey Watson, senior vice president of life event planning at Fidelity Investments, told Yahoo Money. “With the level of inflation the highest it’s been in 40 years, our study is going to reflect the pain people are feeling — and how they are responding to it. This is particularly true when it comes to short-term savings objectives for the first time surpassing longer-term savings objectives.

Inflation is the biggest worry

The impact of inflation on their daily living expenses and ability to save is the top concern for roughly four in ten (43%) respondents, followed by economic uncertainty/recession (39%) and unexpected expenses (38%).

More than 4 out of 10 (43%) baby boomers reported they and their family are in worse shape than last year versus 27% of Gen Z and 32% of millennials.

“One of the reasons older generations are a bit more pessimistic about their finances than younger generations is they tend to look at their retirement balances more frequently,” Watson said. “As a result, the volatility we’ve experienced the first three quarters in 2022 is going to hit them harder than Gen Z or millennials, given their proximity to retirement.”

Among those experiencing a financial setback in the past year, 44% had to dip into their emergency fund. A sizable 19% of millennials, however, said they had to drain their emergency savings completely, and 19% said they didn’t have one to tap.

Debt-free resolutions as credit card interest rates soar

Two-thirds (66%) of respondents are considering a financial resolution for 2023. Gen Z-ers (81%), and millennials (77%), however, are more likely to make financial resolutions than baby boomers (51%).

Among those making financial resolutions, the top motivation is achieving “greater peace of mind” and “living a debt-free life.”

“That many describe 2023 as ‘the year of living sensibly’ is an encouraging indication of the resilience people are tapping into,” Watson said.

That’s swell news, considering that the average household’s credit card balance is $9,260, according to a recent WalletHub Credit Card Debt Survey. Pair that with credit card interest rates which have reached their highest level in 37 years, according to one measure, rising at the fastest pace on record since the start of the year.

The average credit card APR is now 19.4%, breaking the previous record of 19.00% in the first week of July 1991, according to Bankrate’s database that dates back to 1985. The rate has jumped 3.1 percentage points since the start of the year, the largest year-to-date increase.

The rapid rise in rates this year is tied directly to the Federal Reserve’s aggressive hikes in interest rates, which is a flashing red light for Americans who carry credit card debt month to month. Increases tied to Fed actions generally appear on cardholders’ statements within a billing cycle or two. Next week, the Fed will meet and is expected to vote to lift interest rates another half-point.

For those Americans whose financial resolutions are to spend less (28%), save more (39%), and slash debt (32%), the upcoming year is likely to be one that demands buckling down.

A dollop of positivity

In 2023, nearly half (49%) of those surveyed expect to maintain the savings habits they started during the pandemic. Money matters aside, though, many Americans are planning to take the time to exercise more (39%), spend time with those they love (38%), worry less (36%), and focus on things that truly matter (35%).

“When it comes to goals, our dreams are what make life worth living, and our passions create a purpose,” Watson said, “Simply identifying something you’re striving for can help you feel better about the direction you’re headed.”

Kerry is a Senior Reporter and Columnist at Yahoo Money. Follow her on Twitter @kerryhannon

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