As the new year approaches, millions of us are getting ready to make resolutions to change or improve our lives. For some, this could mean building healthier eating habits or getting more active. For others, it might involve breaking a bad habit.
While it’s true that most New Year’s resolutions have to do with physical health, an estimated 24% of Americans focus their energy on shifting their financial habits instead—and it’s easy to understand why. Given that 40% of Americans are struggling to keep up with their bills right now, making a financial resolution may be the best way to start the year off on the right financial foot.
If you’re worried you spend too much and want to make a conscious effort to budget, you might consider taking a savings challenge for the new year. If you’ve ever thought of turning a hobby into a side hustle, a financial resolution could be right for you in 2023.
New Year’s Resolutions by the Numbers
Before we jump into the basics of budgeting and saving, let’s get honest about New Year’s resolutions. The bottom line is that yes, 91% of resolutions fail by January 19.
But this shouldn’t stop us from making a financial resolution! Instead, we should ask ourselves how we can defy the odds and be part of the 9% who successfully make good on their December promises throughout the new year.
Being targeted and intentional about your financial resolution is a great way to follow through on your goals. But if you need some help in that regard, here we take a look at how to make a resolution that builds on your savings strengths, curbs your budgeting weaknesses and helps you get on firm financial footing in the new year.
Changing Savings and Budgeting Habits
To start your financial resolution, do an audit of your current strengths and weaknesses. After all, you can’t make a detailed resolution if you don’t first identify areas that need improvement. Here are some tips to get started:
Build a can-do mindset. Everyone starts off with strengths that can propel their budgeting throughout the year. So begin by focusing on what you do well already, and then think of ways to build on those strengths. For example, maybe you already keep a meticulous budget—you can use your eye for detail to track your spending throughout the year. If you can shift your focus this way, you can go from “I’ll never change my financial habits” to “Don’t worry, I’ve got this!”
Make a list. Write down all of your current spending, broken up into categories like rent, utilities, debt payments and “fun money.” By listing your money habits, you’ll be able to see, at a glance, what you want to change or work on. Isn’t that exactly what resolutions are for?
Flag bad habits. Does anything immediately jump out at you from your list? For example, you might say, “I didn’t realize I spent this much on streaming services!” or “I’m spending way too much shopping on Amazon.” Figuring out where you’re overspending will help you nip the cause in the bud going forward.
Turn negatives into positives. Replace bad habits with good habits. For example, each time you add something to your online shopping cart, ask yourself if you really need to make the purchase. If you don’t, reward yourself by putting the same amount into your savings account instead.
Keep the motivation coming. Remember, a financial resolution isn’t just about tightening your belt. It’s also about giving yourself financial freedom. As your savings grow, do a periodic check-in to see how well you’re doing. You might be surprised to see how much you’re saving—and this will only give you more motivation to stick to your plan.
Making Financial Resolutions Stick
Now that you’ve identified your strengths and areas for improvement, it’s time to focus on building a plan you can stick to throughout the year. Here are some guidelines to keep in mind as you make and implement those resolutions come January 1:
Set specific and challenging goals. Psychologists who study motivation and goal setting found that we’re more likely to follow through on resolutions that are both specific and challenging. So instead of making a vague financial resolution like “I’m going pay off all my debt this year,” you should be more specific—for example, “I’m going to pay an additional 15% each month toward my student loan principal.” Small habit changes like this are easy to track and hold yourself to, and they truly add up over the course of the year.
Make goals small and achievable. If you set pie-in-the-sky goals, they’ll be so hard to achieve that you’ll get discouraged. To be one of the 9% of people who follow through on their resolutions, break yours into smaller, more attainable microgoals. For example, if you’ve identified that you want to curb your spending on dining out, tell yourself, “I will only dine out once a month, and I will put the money I save into a high yield savings account.” Once you see yourself achieving your goals, you’ll be more apt to stay motivated throughout the year.
Find someone to hold you accountable. Talk about your goals openly with your friends and family and let them know you want them to help you stay on track. Regular check-ins can do wonders to keep you motivated, and you’ll be proud to let your circle know you’re following through.
Forgive yourself if you make a mistake. With New Year’s resolutions, many people scrap their plans if they fall into old habits. Don’t fall into this trap. Remember, we’re only human and it’s okay if you have a bad week and don’t stick to the plan. The important thing is not to let one slip-up derail your whole plan. In fact, it builds resilience to identify your mistakes and recommit to sticking to the plan.
Reward yourself. Let’s be honest: sticking to any plan is hard—and staying with a savings plan is even harder. That’s why it’s key that you give yourself affordable rewards along the way. If your goal is to put $8,000 into your high yield savings account next year, reward yourself with a new pair of shoes or a road trip every few months. This way, you can reap the rewards of your plan all year long to keep yourself on track and help you feel it’s worth it.
Making a savings and budget resolution for the new year is a great way to put yourself on better financial footing next year. With these tips in hand, you can stride into 2023 confident that you can achieve your goals for a financially healthy new year.
William Myers is a financial writer based in Dallas.
Illustration by Darya Semenova
LEARN MORE: The Benefits of a Synchrony High Yield Savings Account
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