5 Financial Resolutions for 2023 That Will Actually Stick
A new year is the perfect time to change old habits for the better — especially when it comes to your financial well-being. But those pie-in-the-sky financial ideals that you wish you could achieve aren’t the ones that will stick. For example, if you know that making a resolution to cut out all discretionary spending for the next year will never work, why waste time pretending it will? Instead, consider financial resolutions that are not only worthwhile but also that you believe you can achieve.
Make Time Each Month To Revisit Your ‘Why’
When you don’t have a compelling reason to make the effort to do something, chances are it won’t become a long-term habit. So come up with a “why” for each financial resolution you make. For example, if you decide to avoid shopping online for a month to save money to put toward your credit card bill, ask yourself why that particular resolution is important to you. A good “why” is that you don’t want to be stuck with a high credit card balance that you have to pay interest toward each month.
Once you’ve written down a “why” for each financial resolution you’ve made, revisit them each month to make sure they still hold true. If not, come up with new compelling reasons to help you stick to them.
Save Money by Doing Things Yourself
Don’t panic. You don’t have to give up everything you enjoy having done for you — especially if it’s something that makes your life easier and more organized, such as hiring a maid service.
“My favorite financial resolution involves assessing what ‘little luxuries’ you regularly treat yourself to that you could potentially do yourself,” said Trae Bodge, smart shopping expert for TrueTrae. “Perhaps it’s going to the car wash once a month or getting regular manicures. If you commit to doing that thing yourself instead of paying for it, while also committing to socking that money away, imagine how much you’d save in a year.”
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Improve Your Credit Score
A solid credit score can be helpful in so many ways, especially when it comes to saving money on interest. One way to improve your credit score is to make a commitment to pay off the balance on your credit card each month.
“If you can get to the point where you’re regularly using your credit card and paying it off every month, your credit score will grow by leaps and bounds,” said Scott Stanley, CFP and founder of Pharos Wealth Management. “You’ll also earn rewards offered by your credit card company if you’re regularly using your credit card in a responsible way. The benefits have a compounding effect, so get to work on building good credit card habits as soon as you can!”
Start Saving or Increase Your Contributions in a 401(k)
“A great resolution could be to either start or increase your contributions into your 401(k),” said Tania Foster, founder and financial advisor of PlanTrust Wealth Management. “Some people find it difficult to set aside money for retirement or are unsure of where to start, and a 401(k) is a great starting point. Set or increase your contributions in the new year and reevaluate as needed. The great thing about your 401(k) contributions is that it comes out of your paycheck — if you don’t see it, you won’t miss it. Set your contributions now and get in the habit of saving. You won’t have to make any changes unless you receive a bonus or an increase in pay, and in most cases, your employer will give you the option to make those contributions automatically, so you won’t have to do much.”
Get the Company Match
Speaking of 401(k) contributions, make sure you’re not leaving money on the table.
“A lot of employer-sponsored 401(k) plans offer a company match,” said Brian Mirau, founder and president of Mirau Capital Management. “For example, if a company’s 401(k) match is 3%, they match up to 3% as long as the employee contributed that same amount into their 401(k). Make it a New Year’s resolution to double-check how much you are contributing to your employer-sponsored retirement plan to ensure you are contributing enough to get the company match. If not, you are leaving free money on the table that could be invested and grow over time. This resolution is great because one simple adjustment to your retirement contributions can increase the amount you’re saving for the future.”
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