The New Year is always an exciting time of fresh beginnings, and it’s an excellent time to get in control of your finances. Whether you’re looking to save more money, reduce debt, or invest in your future, setting a budget and creating achievable financial goals can help you make 2023 your most successful year yet.
However, as most of us who have set resolutions in the past know – sticking to them and achieving them is often the hard part.
In this guide, we’re sharing our top tips and strategies for staying on track with your financial goals, so you can make sure your money is working for you.
Why make financial resolutions?
Money is something we all need – it makes the world go round, after all. However, as important as money is in our daily lives, from keeping a roof over our heads to ensuring that we can feed ourselves and our families, financial education is something that is severely lacking within our society.
In school, we’re taught algebra, and how to quote Shakespeare, but nobody teaches us about basic economics, how to budget when running a home, or how to live within our means and avoid getting into debt.
Many people argue that schools shouldn’t be responsible for this and that parents should be the ones to teach their children about money, which is true to a certain extent. However, this argument assumes that the parents themselves have a solid understanding of money and can model good financial behaviour.
As we know, this isn’t always the case, so the cycle continues.
Making financial resolutions and taking control of your finances is just as important as eating a balanced diet and exercising to maintain good physical health – but just like other resolutions you make, you have to get honest with yourself and put in the work to make lasting changes.
The good news is that these changes aren’t hard to make. It’s simply about creating new habits. It’s often said that it takes, on average 28 days to build a lasting habit. So, once you’ve stuck to the tips in this guide for around a month, you’ll soon find they just become part of your routine.
Create a budget
The first step to achieving any financial goal is creating a budget so that you can start to understand your own financial situation and see where your money is really going.
Budgets are pretty eye-opening, and once you start creating your budget and sticking to it, they become pretty addictive – especially when you notice your financial situation is improving based on the changes and tweaks you’re making.
Many people find the idea of creating a budget overwhelming, but it really doesn’t need to be complicated.
You can use a budgeting app, you can use an old-fashioned pen and notepad, or just a simple excel spread sheet (my personal choice). The method isn’t important; it’s building the habit that matters.
Your budget should look something like this:
Income – everything you have coming in each month
Fixed expenses – your rent/mortgage, utilities, phone, etc.
Variable expenses – groceries, entertainment, clothing, etc.
Disposable income – once your bills and expenses are paid, this is the amount that’s left over for you to spend. Ideally, a portion of your disposable income should go towards savings.
Track your spending
If you want to really start to understand how to make changes with your spending and achieve those financial resolutions, you need to get honest about where your money is going.
The daily coffee you pick on the way to work doesn’t seem like much at the time, but over the course of the month, it all starts to add up. This article shows that the average American spends $105 per month or $1,277.50 per year on a daily take-out coffee.
When you realise that’s money you could save each month, it seems like a lot.
Setting achievable financial goals
One of the reasons that many people find it difficult to achieve their goals isn’t because they lack discipline, or that there’s something wrong with them, it’s simply because the goals they’re setting aren’t realistic for their personal circumstances.
For example, if one of your financial resolutions is to save more, that’s great. However, you need to save in line with your earnings and ensure that you’re not putting yourself under more financial strain in order to achieve this.
Setting an arbitrary goal of saving 50% of your monthly income isn’t a realistic option for most people when there are essential bills to be paid. The best way to be able to save more is to start with smaller amounts while reducing your outgoings as much as you can. This is where tracking your spending is really going to help you to stay on track.
Strategies for saving money
If you’re not a saver by nature, it can seem like a challenging mindset to get into, but like anything else worth doing, it’s like a muscle that needs to be built over time – and the results are always worth it.
The ways you approach saving will depend on your circumstances and your financial goals. You might need to cut unnecessary expenses if you spend too much on things you don’t need. Online loan provider Wonga has created this rather useful guide for reducing unnecessary monthly spending.
If your spending is okay, but you’re just not in the habit of putting money away, you could set up an automatic savings plan where a portion of your salary is automatically deducted before you can spend it.
It’s also important to consider your savings goals and understand what you’re saving for. Are you trying to save up for a car or a holiday? Are you trying to save for retirement?
Once you know what you’re saving for, it’s easier to plan how to save. Your bank is a great place to go since they’ll offer a variety of savings accounts based on your goals, whether you’re saving for a rainy day, a shorter-term purchase, or securing your retirement.
When it comes to being better with money, there are no magic wands or quick fixes. Successful financial planning is an on-going process that requires patience, discipline, and diligence, but it’s one that’s definitely worth it.