As a new year quickly approaches, it's time to start thinking about what New Year's resolutions you want to set. You might want to prioritize your health, career, family, or hobbies in 2023 — but what about your finances? Setting financial New Year's resolutions is a great way to set up the new year for success.
But what goals should you set? For some ideas on what new goals and healthy money habits you could set for the year ahead, keep reading to see our top ideas to try out.
6 financial New Year's resolutions to try
1. Make your financial savings goals SMART
A great way to prioritize your finances in the new year is to start by revisiting your savings goals. What are your main goals for next year? Perhaps you want to save for a wedding, buy a house, start saving for retirement, build a college fund, or pay down high-interest debt.
Whatever it is, the best way to set goals and actually achieve them is to be specific. The SMART method of setting goals is very popular. SMART goals are:
For example, if you want to save for a vacation, you could break it down like this:
Specific — Your target is $1,000
Measurable — You can measure how much you save each month
Attainable — Aim to save a set amount that's comfortable each month
Relevant — Saving for a vacation
Time-based — Aim to save the full amount by December 2023
You can apply this method of setting goals to any type of savings goal you have. By breaking it down, it becomes more achievable and realistic.
2. Improve your credit score
Another great goal for your financial health is to improve your credit score. This is something you can work on throughout the year in various ways.
To start, be sure to check your current score and set reminders to regularly to check your progress over the year. You might even want to set a SMART goal for this as well.
Next, think about different ways you can improve your score, including:
3. Save for an emergency fund
Expensive emergencies have a tendency to creep up on us when we're least expecting them. Common ones include a medical emergency, job loss, salary reduction, car repairs, or house repairs. In each of these cases, it helps to have an emergency fund that you can dip into when you need it the most.
The rule of thumb that many like to live by is to set aside three to six months of household expenses for your emergency fund. However, anything you can set aside for emergencies will be a big help and if you can get into the habit of saving for an emergency fund, you will improve your financial health overall.
4. Cut financial spending in one area
If you're looking for money saving tips, you can start by identifying one regular yet unnecessary expense.
What is it that you spend money on every day/week/month that you could happily cut back on? It could be a subscription to an online magazine you don't read much, a gym membership you don't use, or the classic takeout coffee you get on the way to work. Aim to either reduce your spending on it or cut it entirely.
To motivate yourself, calculate how much you spend in this area a year on average to see how much you could save.
5. Clear your financial debts
Debts can hold back even the most financially savvy people. While debt may be unavoidable for many people with mortgages or student debt, smaller debts like personal loans or credit cards are best cleared as soon as possible to avoid the high-interest debt and to protect your financial health.
If you have several debts you want to target, you might want to start with the largest first or highest-interest debt and make extra repayments on that. Avoid making only the minimum payment if you can. This will help you clear them faster and free up cash, but it could also improve your credit score too.
6. Re-evaluate your financial budget
The new year is a perfect time to sit down and take another look at your budget. If you don't already have a budget in place, it might be time to try out a popular method to help you take more control over your expenditures.
You could keep things simple and adopt a "pay yourself first" philosophy or use money saving tips like the 50/30/20 method. This involves spending 50% of your income on essentials, 30% on purchases you want, and putting 20% into savings accounts.
Alternatively, you could get really granular with it and set specific amounts for specific expenses and use a spending tracking app.
Make your financial New Year's resolutions stick
New Year's resolutions are notoriously hard to stick to. But with a little planning and forward-thinking, you can stay on track and develop healthy money habits for the future. Here are some tips to help.
Make your resolutions realistic — The number one rule to make your resolutions stick is to make them achievable. Being ambitious is great, but if your resolutions are unrealistic, you're setting yourself up for failure.
Check your progress — It's easy to lose sight of your goals if you don't regularly check-in. Check your progress each month, and be sure to reward yourself for hitting milestones and achievements as you go.
Visualize the end result — When you consider giving up, remind yourself of why you made the resolution in the first place. It helps to have a clear idea of what the end result will be. Visualize what it will look like if you stick with your goals.
Get an accountability buddy — It's so much easier to stay on track when you're not doing it alone. So pair up this year and find someone else with the same or similar goals so you can keep each other motivated.
By following some simple steps, tracking your progress, and having a clear goal in mind, you can start working towards better financial health.
If you're not sure which resolutions to pick, why not combine a couple? You could make cutbacks on unnecessary purchases while using a new budgeting method. Perhaps all those savings could go into paying down debt or into a savings account to help get you closer to your savings goals. Ask yourself what your biggest financial priorities are for next year, and try a couple of our financial New Year's resolution ideas to get the ball rolling.