6 smart new year financial resolutions
Set yourself up for success in the new year with these clever money-saving tips!
7 min read
This list of new year financial resolutions will get your 2023 off to a great start. By keeping your money-saving goals for the new year clear in your mind, you’ll take that important first step toward financial independence.
However, to make these resolutions stick, you’ll need to define your financial targets, create a budget, and adopt a few money-saving habits. But don’t feel overwhelmed—here are the six smartest new year financial resolutions to help you achieve your 2023 savings goals!
1. Define your financial goals
If anything, 2022 taught us that the world can be incredibly unpredictable. Yet, it also taught us that having a set of clear—but flexible—goals to work towards can provide a great deal of solace in uncertain times. By creating some new year financial resolutions, you give yourself something to work toward, and that can be incredibly rewarding.
However, the key to achieving your resolutions is to be specific about your financial goals. If you’re too vague, it’s often hard to measure your success and thus, easy to become demotivated. So, instead of making goals such as, “I want to get out of debt and save for a vacation” make a resolution like, “I want to be fully out of my credit card’s overdraft and I want to have €2500 in my savings account for my trip to New York by the end of 2023.”
Short-term financial goals
Once you have a list of your new year financial resolutions, it’s important to separate them into short-term and long-term goals. In doing so, you can give yourself realistic timelines for when you’d like to achieve these targets. Short-term financial goals include the following:
- Saving for a vacation
- Creating an emergency fund
- Paying off your credit card debt
- Creating and sticking to a budget
Long-term financial goals
While your short-term financial goals are often achievable within the space of a year, long-term financial goals require investment over a much longer period. Though they can seem impossibly challenging, the sooner you commit to them, the sooner you’ll reach them. Such long-term goals include:
- Saving for your pension
- Accumulating a deposit for a home
- Saving for your child’s college fund
Once you’ve separated your new year financial resolutions into long- and short-term savings goals, it’s important to allow yourself some leniency. Given the unpredictability of 2022, we’ve learned that being flexible with your goals is the only realistic way to stick to them.
If, for example, you were to lose a steady stream of income, putting your savings resolutions on hold until you can get back on your feet is the practical thing to do. However, it’s vital not to interpret this setback as a failure. We can only change the things we can control—the rest we have to accommodate as best we can.
2. Create a budget plan
Once you’ve chosen your financial goals for the year, you need to create a budget that’ll help you achieve them. Learning how to budget is one of the best skills to perfect if you want to gain financial independence. Here’s how to do it, step-by-step:
- Keep track of your cash flows over a 30-day period. This means making notes of all your income streams and expenditures and comparing them to see if you’re left with a profit or a loss at the end of each month.
- Next, you need to categorize your expenditures as either variable or fixed costs. Fixed costs are more difficult to adjust and include expenditures such as your rent or utility bills. Variable costs are more flexible and cover expenditures such as groceries, dining out, and any entertainment subscriptions.
- Once you’ve separated your expenditures, you need to identify any variable costs that you could cut back on. Here, a budgeting app may be particularly useful.
- Then, using the projected savings you’ll make from cutting back on these variable costs, decide upon a specific amount of money you’d like to contribute to your savings each month.
- To keep your budget realistic, make sure to review your budgeting performance regularly and make adjustments where necessary. Fluctuations in the amount you can save each month are inevitable. Rather than letting them demotivate you, accept that these ups and downs are a part of life.
3. Personal financial education
If you want to get serious about keeping to your new year financial resolutions, it’s a good idea to give yourself a personal financial education. But what do we mean by that? Keeping financially educated simply means you make it an active habit to keep learning about money. In doing so, you improve your understanding of financial topics and become more financially intelligent.
Here are some ways you can improve your personal financial education:
- Listen to personal finance podcasts
- Subscribe to a financial newspaper or magazine
- Purchase some books about best financial practices
- Employ the services of a financial advisor
- Follow blogs on investing, saving, or budgeting
4. Learn how to save money
Learning how to save money helps you budget more effectively. In addition to educating yourself on financial matters, there are many excellent tips and tricks you can start implementing today to help you reach your savings goals. Here are some ideas on where to start:
- Cut back on your weekly grocery spend. This means planning your weekly meals in advance, creating a specific shopping list, and not deviating from it once you’re in the store! By focusing on cooking more meals at home, you also reduce how often you buy take-out, which will save you a great deal of money in the long run.
- Reduce your utility bill. One of the easiest ways to do this is to ensure you’re on the cheapest electricity and gas tariffs available. Next, consider swapping all of your light bulbs to LED bulbs as these can be 75–85% more energy efficient than standard bulbs. Then, locate any gaps around your windows and doors and fill them up—a considerable amount of energy is lost when heating a room which is leaking air.
- Save money on rent. This could mean choosing to live with a roommate if you live alone, or swapping your larger room for a smaller room if you already live in a shared apartment.
5. Create better money-saving habits
Being financially smart and staying committed to your financial goals is a mindset. To see your goals through to fruition, you need to cultivate a series of money-saving habits. In addition to learning how to budget, furthering your financial education, and learning how to save, there are several money-saving habits that are worth putting into motion as soon as you can:
- Start buying all your clothes second-hand and selling the ones you no longer wear
- Choose one day a month (or a week, if you can manage it), as a ‘no-spend’ day where you literally spend no money for 24 hours
- Make it a habit to eat at home more often than eating out
- Cancel any unused subscription services
- Take up a side hustle to bring in a little bit of extra cash each month
6. Manage debt
To begin with a good chance of meeting your new year financial resolutions, you need to focus on getting yourself out of any outstanding debts. This may even be your financial resolution for 2023. The truth is, until you’ve paid off your debts, your ability to save money will be severely limited. This is because most debts incur interest, which accumulates over time. This can then significantly eat into the money you’re able to put into your savings account each month.
To manage your debt, make a list of all your liabilities and organize them in accordance to their annual interest rates. Those with the highest interest rates will be the ones you’ll need to pay off first. A great method for getting out of debt is to use the 50/30/20 budgeting rule. Created by Senator Elizabeth Warren when she was a bankruptcy specialist at Harvard, this budgeting method suggests splitting your post-tax income as follows:
- 50% goes towards your “needs,’ i.e., your fixed costs such as rent and utility bills.
- 30% goes towards your “wants,” i.e., your variable costs such as groceries and entertainment subscriptions.
- 20% goes towards your savings, i.e., paying off any outstanding debts or building up an emergency fund.
Again, flexibility is key. If 20% of your post-tax income is not enough to cover your basic debt repayments, you’ll need to adjust your fixed and variable expenditures to increase your overall debt contributions. However, if 20% more than covers your debt repayments, you may want to contribute the remaining percentage towards a different savings goal.
Resolutions made simple with N26
At N26, we make budgeting simple. With our online bank account, you get push-notifications each time a transaction takes place on your account. This keeps you up-to-date with your finances and helps you track your spending more effectively.
Taking only a couple of minutes and requiring absolutely no paperwork, opening your N26 bank account today will go a long way to helping you achieve your 2023 financial resolutions!
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