Happy New Year! The start of a new year is always a good time for making resolutions. Maybe this is the year that you will make your best New Year’s Resolutions yet!
It’s easier to make a change when a new year or new period starts, but why is this? Is it the extra push we need to start making a change for real? Anyway, whatever the reason may be, use the start of the year to your advantage. January just started and it’s time to get your finances on track!
Even if you are reading this blog post a while after the new year started, you can still give it a go, it will only help you to improve your financial situation.
In this post, I will be talking about financial resolutions that would be great to add to your other goals for this year. Find out which ones you can use to your benefit!
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The 9 Best New Year’s Resolutions for Your Finances
1. Tracking Your Spending
Improving your finances always starts with knowing your spending habits. Without knowing how much you spend and what type of things you buy with your money, you won’t know how to save more money or keep more bucks in the bank.
Make a list to track every expense you make during each month. You can do this at a set moment every week, checking your bank statements and receipts to make sure you put everything down in your expense tracker. Whether you do this digitally or on paper is totally up to you. Assign different expenses to bigger spending categories such as health, food, housing, utilities, transportation, socializing, luxury, etc. This budget planner has an expense tracker included.
Tracking your spending will give you valuable insights into which categories you overspend your money. When you figure out in which categories you overspend, you can start to make a change! This knowledge is very powerful and can have big effects on your financial situation.
Start taking control of your finances this year and make this tracking habit one of your financial New Year’s Resolutions.
2. Start Budgeting
When I heard the term ‘budgeting’ for the first time, I initially thought that it was just tracking your income and expenses every month. This is not the case, that would be too easy, right?
Budgeting is really something everyone should do! When you can create a budget that works for you and your family, it will give you so much more peace of mind. No more stressing about your finances when you have a budget that you know you can stick to.
Before you can start budgeting, it’s best to track your expenses for a few months so you can estimate how much money you need for every spending category. Adjust your budget to your income and try to save some money every month. I wrote different blog posts to teach you more about budgeting. Check them out to learn more!
Budgeting is determining how much money you need for all your monthly expenses, setting money aside for them, and splitting up your total income into different expense categories. Every month again check if you did stay within budget and if you were able to save something. Or did you go into debt and need to fix this? It’s analyzing your own spending habits and income streams and coming up with solutions for budgetary problems you might be having.
Keeping a budget can help you save a lot more money because you can consciously put your money into a savings category. Stop overspending and start budgeting as soon as you can. Try budgeting with a paper planner or pick a digital one if that is more to your liking.
If you have never budgeted before, I would encourage you to check out my blog post about budgeting for beginners.
3. Paying Off Debt
Next up in this list of New Year’s resolutions isn’t a very fun one, but it is so important to do this, pay off your debt! Fortunately, there are a lot of fun ways to keep track of this.
You can create a tracker for this yourself on Canva or browse online to find cute ones to track everything you save to pay off your debt. Let me share a blog post where you can download beautiful debt trackers for free to get you started! Click here to find this blog post with free debt pay-off trackers to print.
Paying off your debt is not a fun thing to do but it’s something you have to do and after your debt is paid off, you will feel so relieved! It creates huge financial stress having a big sum of debt hanging above your head.
You have to be determined and make a plan for how you are going to do this. Don’t wait until the end of each month to see what is left for paying off your debt because there probably won’t be much left for it. Have a goal, a set amount of money you are trying to repay every single month. If you don’t reach it every month, don’t feel bad, as long as you keep progressing, and maybe try a bit harder next month.
Being debt-free is an amazing feeling that I want for everyone. If you can avoid going into debt in the first place, this is even better, so try to never go into consumer debt! There are other kinds of debt you almost can not avoid if you want to go to college or buy a house and that’s fine. Just focus every month on paying back a bit of money you owe until you are debt-free!
4. Emergency Fund
Another great New Year’s resolution, saving up to create a financial buffer, the emergency fund!
If you want to avoid going into debt as we discussed in the previous resolution, you should build your emergency fund.
How much money you need to set aside to fully fund an emergency fund depends on many different factors. Your work and family situation determine a lot, and how safe and secure you want to feel with this emergency fund is also a determining factor.
A basic guideline is to set aside 6 months of net income so you can cover six months of living without earning money during those months. If you are used to living on two incomes, your emergency fund has to be funded for those two incomes.
When you are self-employed and don’t have a very regular secure income, you could create a bigger emergency fund because your work income doesn’t provide much security to begin with. Maybe go for 9 months of net income in this case.
The goal is to be able to afford to live your life when something unexpected happens like your car, or other important household appliances breaking down for example. When you lose your job, you should have time to find a new one and be able to support yourself during the possible months of job searching.
An emergency fund really is your financial safety net, start growing it for when the times get tough. Set aside some money for this each month until it is fully loaded and you have the money in case an emergency happens.
If you want to be extra sure that you have enough money, maybe save up until you have a whole year of your income in an emergency fund savings account. You never know what life will throw at you and having this extra financial buffer can only help you when you need it.
5. Financial Education
Educating yourself should always be one of your personal goals. Financial education can be an excellent New Year’s Resolution.
As humans, we love to learn and to improve our lives for the better. There are so many resources out there for free to learn something new every single day!
To improve your finances, you should dive into books, blogs, and YouTube channels about finances to learn more and reap the benefits from this gained knowledge. You could assign a moment every week or if that’s too much for you every month to educate yourself on this topic. Start following people who have something interesting to say about money (hopefully me included!).
There are tons of books in the library to rent that you can read while sitting comfy on your couch or even on the beach on holiday! They don’t have to be boring, choose the right ones that are informative as well as engaging.
You can set a goal to read X amount of books this year or to spend X amount of time every week or month and you will grow from this!
6. Save For Retirement
Another not-so-fun New Year’s resolution but necessary if you plan to live past your working life.
Where you live determines how to best do this saving for retirement thing. Every country probably has a way of saving or investing money in a fund that is meant for your pension. Most of the time, this will come with tax benefits, so research the options available for your specific situation!
If you don’t save for your retirement, you will notice that the pension you get from the government won’t be that much money and you can’t keep up the lifestyle you are used to. This is sad because when you retire, you should be able to enjoy the rest of your life while having enough money to do so!
Start saving for your retirement as soon as you start working, this way you can save a smaller amount each month than when you would only start later in life.
You could also go for an early retirement if this is a possibility for you. The FIRE movement is getting bigger and bigger so if you think you might be able to join this financial independence retire early movement, go for it!
7. Start Investing
Starting with investing can feel like a big step into the unknown, without certainty for your money. As a New Year’s resolution, you can start your investing journey this year for real!
You can start investing with just a little bit of money to get started. Dip your toe into the water without taking too much of a risk.
Before you can start investing you should learn more about it by researching the topic on YouTube and reading books or blogs about it. I spent a few months diving into this subject before I dared to put my first few hundred dollars onto a broker’s app.
I do really believe in compound interest and how starting early on in your life will help you gain so much more money, only because time in the market is so important for this. I love ETFs because I don’t have to do as much research as you should do with individual stocks.
When you are choosing to invest in individual stocks, you have to do a good fundamental analysis and keep a very close eye on them and on the company you are investing in. It’s not for me, at least not yet, maybe someday. With index funds and ETFs, you are investing in a lot of different companies, so it’s a lot safer because you are diversifying your risk.
You can set goals for yourself to first learn about the stock market and investing and after you have a basic knowledge, give it a go! You will learn as you go so I would recommend starting with a smaller amount of money because you probably will make mistakes in the beginning. Learn from them and then let your money work for you!
You could also invest in real estate as a New Year’s resolution but you will have to have more money upfront to be able to buy a rental property.
8. Earn More Money
A great New Year’s resolution is to earn more money! Easier said than done you might think. It is a fact that you can only save so much money. There is a limit to saving and living frugally but there is no limit when it comes to earning money!
You can earn more money by getting promoted at work, getting another job that pays more, or working more hours. These are all great options if they are available to you and you can manage them.
Getting a promotion oftentimes comes with more responsibility and you have to determine if this is worth it for you personally. Working more hours can also take a toll on your well-being so think about it before you decide to work more hours or multiple jobs to earn more money. A good work-life balance is very important to have! Creating a work-life balance for yourself can also be a good New Year’s resolution.
Think about creating another stream of income next to your main job. Do some research to find what kind of income stream is achievable and would be best for you. This can be in the form of a side hustle where you actively work to get paid. Try to find a side hustle that you enjoy doing because if it is hard for you to do, you probably won’t be able to combine it with having a main job as well.
Passive income streams are also a must to look into! Passive income is basically making money while you are sleeping. This really sounds too good to be true, doesn’t it? Of course, before you can have passive income, most of the time there is some upfront work that needs to be done first. That’s the catch!
When you establish different sources of income, you will be much safer financially when you lose one of them. Get started this year! Give it a go!
9. Save For Your Financial Goals
Saved the most fun of this New Year’s resolutions list for last, namely saving for your financial goals!
Goal-setting can be really motivating, thinking about what goals you have and how you are going to reach them is very inspiring. Financial goals can be boring like saving for your retirement or setting up an emergency fund, but they can also be a lot of fun!
Examples of fun financial goals are saving to go on your dream vacation, saving for a beautiful house or apartment, and saving for luxury items to treat yourself once in a while. In my blog post about sinking funds, you can find some inspiration for fun and less fun categories to set aside money for.
Your goal could also be to retire early or to create an extra cash flow through dividend investing.
It’s nice to be able to reach your goals but for most of them, this won’t happen overnight. To stay motivated, divide your big goals into little subgoals so you can celebrate achieving them more often.
When you are thinking about all your New Year’s Resolutions, spend some time thinking and adding a few financial goals to them as well. Your financial health will thank you!
New Year’s Resolutions for Financial Health
New Year’s resolutions originate from all the different parts of our lives. We set resolutions for our health, relationships, work, personal development, and more. Finances are often not seen as the most fun part of life but we can not survive without money so nevertheless is it important to us.
Make a priority of your financial health this year by adding some of the New Year’s resolutions you find in this list. Make them your own.
I hope you have a wonderful New Year, filled with happiness, well-being, and success!