I’m a Financial Expert: If You Set Only One Financial Resolution, Make It This
Written by
Martin Dasko
Edited by
Ashleigh Ray
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As the New Year begins, it’s natural to start reflecting on your financial situation and your long-term goals as you review your progress.
You may realize that you can’t achieve many of your life goals if you don’t have the money to do so. A good way to get your finances in order and make progress toward your goals is to set money-related resolutions for the year.
Not sure where to start? Here’s what our experts think should be your number one financial resolution this year.
Create a Budget You Can Follow
Jessica Morgan, the founder of Canadian Budget, said the beginning of the year is a good time to start a budget.
“It might take a bit to figure out, but it gets easier each month,” said Morgan. “Plus, you’ll see the payoff as your debts go down and your savings grow throughout the year.”
“I always tell everyone that not having a budget is like driving blindfolded,” said Jeff Rose, a Certified Financial Planner (CFP) and founder of Good Financial Cents.
“You’re bound to crash. Considering only about one-third of Americans have a detailed budget, it’s no wonder so many are in financial trouble.”
The most important resolution you can set for 2024 is to have a game plan — review your spending and create a realistic budget that you’ll actually follow. Every other financial goal falls into place when you analyze your spending and make a plan.
For example, you can’t save for that downpayment on your first home or plan your dream trip if you don’t know where you currently stand financially. You want to figure out how much you’re spending and saving monthly so that you can determine timelines for your various longer-term goals.
How To Create Your First Budget
“Many people believe the word ‘budget’ means they can’t have any fun, and it comes with too many rules,” said Morgan.
But that’s not the case.
According to her, “A budget is simply a more detailed plan for your money. A budget can help you reach your goals, spend on things that bring you joy and still save and pay off debt.”
Morgan added, “Even if you’ve never written down all your expenses, you [should] know roughly how much you make and spend.”
Start by writing out the following financial information so that you have it all in front of you:
- Your monthly fixed expenses. How much do you spend every single month? This will include items like rent, mortgage, insurance, cell phone bill, and so on.
- Your monthly variable expenses. How much are you spending on expenses like your meals and entertainment? You want to know how much money roughly leaves your bank account monthly.
- Your monthly income. How much money do you have coming in every month?
- Your monthly debt payments. How much are you spending on your debt payments? This includes everything from your student loans to your credit card balance.
- Your financial goals. What do you want to save up for? How much money do you need for that major purchase?
Your budget and financial game plan will include all of that information. You can use a spreadsheet to compile it all or one of the numerous money management apps available. The goal is to review your spending and ensure you have a system in place.
If You Already Have a Budget
“Check and update it regularly,” stated Morgan, recommending people do this on a monthly basis.
“A budget isn’t set in stone; it changes as your life changes,” she said. “Keeping track of what you spend is really important — it helps you see where your money goes, find expenses you might have missed and adjust your budget to make it more realistic.”
Remember, you’re trying to set up a plan you can follow to reach your various financial goals. A budget isn’t about limiting yourself or feeling restricted. Your budget should give you the freedom in the future to live your life based on your values.
“Whether you’re starting from scratch or tweaking what you have, being mindful about your budget helps keep your finances healthy and stable in the long run.”
Runner-Up Resolution: Invest in Yourself
Reviewing your budget and taking your finances seriously helps you with other areas of your life. Once you have a financial game plan in place and know what steps to take next, you can consider another resolution.
“I’m a huge advocate for self-investment, and it’s not just about money,” explained Rose. “It’s about your future. Cutting corners on education or health may seem like saving money in the short term, but it’s a false economy.”
Rose provided this example: “For instance, enrolling in a course to enhance your professional skills, like a digital marketing certification or a project management course, can open doors to higher-paying job opportunities. It’s an investment that pays off.”
As you create a budget and begin to track your spending meticulously, make sure to invest some time and money in yourself. Doing so, can lead to an increase in income, allowing you to reach goals faster.
“Spending on a gym membership or a yoga class isn’t just a cost; it’s investing in your health, which is priceless,” added Rose. “Neglecting your well-being to save a few bucks now can lead to costly medical bills down the line.”
As the New Year begins, many people will work on improving their money habits to improve their situation. Take this opportunity to start fresh, review your spending and create a budget that gets you closer to your goals.
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