10‌ ‌Financial‌ ‌New‌ ‌Year’s‌ ‌Resolutions‌ ‌to‌ ‌Get‌ ‌Your‌ ‌Year‌ ‌Started‌ ‌Right‌

The end of the year is a time for reflection–and a time for setting some intentions on what you want to change for next year. If your finances are an area you want to focus on, check out these 10 financial New Year’s resolutions.

1. Pay Yourself First

It’s normal to be thinking about bills that are due or that shiny item you saw in the store when your paycheck comes in, but one of the best things you can do for your finances is pay yourself first. While some people advise setting aside 10%-15% of your income for savings before you do anything else, the habit is more important than the amount itself. 

If things are tight, you may need to start with just 5%–or even $5. Once you’re used to it, you can see if your budget can handle boosting those numbers. There are some banking and savings apps that even transfer the money automatically for you so it’s in savings before you even see it.

2. Know Where Your Money Is Going

If you’re not tracking your spending, it’s easy to underestimate how much things really cost. For example, if you think you’re spending around $30 per month on your morning coffee runs but it’s really closer to $90, that’s a substantial difference. One of the easiest ways to track your spending is to use a budgeting app. There are manual and automatic options, depending on how involved you want to be and what your goals are.

Once you know what you’re spending on average on different categories, it’ll also give you a better idea of how to create your budget. There’s no point in saying you’re only going to spend $100 a month on eating out if the last three months have averaged $300. Instead, it’s much more realistic and attainable to say that you’re going to spend $250 if you want to start cutting back.

3. Create an Emergency Fund 

A popular New Year’s financial resolution is to start an emergency fund, and for good reason. Having some cash set aside can give you more peace of mind and ensure your budget doesn’t bust when unexpected expenses arise. How much you need varies widely depending on your income and expenses, but most experts recommend having three to six  months’ worth of expenses on hand.

You don’t have to have a lot of cash to start your emergency fund. You can sell high-value items or hold a garage sale to start bankrolling your savings. To keep your emergency fund going, consider small steps such as rounding up your change when you swipe your debit card and moving the extra to your savings once a month or putting every $5 bill you get back in change into your account.

4. Pay Off Debt

Getting debt-free–or at least putting a dent in your monthly payments–is a common New Year’s financial resolution. While paying off debt helps you in the short term by decreasing your monthly expenses when you don’t have to make payments anymore, it’s also a strategy that can save you hundreds or even thousands in interest over the life of the loan.

To get started, make a list of all your debts and then decide which one you want to tackle first. Some people like to start with the debt with the highest interest rate, while others prefer to get small wins quickly by paying off the debt with the smallest balance. Pick whichever makes sense for you. Once you get that debt paid off, choose the next to start making extra payments on. 

5. Start Investing

It’s never too early to start investing, and if you don’t have anything set up for retirement yet, next year is a great time to start. While it’s always a good idea to discuss your financial goals and investment strategies with an advisor, it is possible to do some DIY investing just to dip your toes in. Apps like Acorn and Robinhood let you invest small amounts and stay in control of where your money is going.

If you’re ready for more serious investing or already have a 401(k) or something similar through work, you could make a resolution to start maximizing your employer’s matching contribution or upping the percentage of income you’re stashing away.

6. Establish Sinking Funds

If you’re constantly surprised by “unexpected” expenses like your dog’s yearly vet exam or the holidays, it’s a sign you could benefit from creating sinking funds. Sinking funds are like mini savings accounts that are item- or category-specific. The idea is that you take the yearly amount you’d spend on that thing and divide it by 12. This gives you your monthly amount to go ahead and set aside. That money builds, and then when the expense comes up, you already have the cash and don’t have to scramble. 

Here’s an example. If you know that you normally spend about $800 on back-to-school clothes and supplies for your kids every August, you divide that by 12 and get around $67. You start putting that amount back each month, and the next time August rolls around, the money is already there. It’s an easy way to break large but infrequent expenses into more manageable amounts.

7. Make Use of Discounts and Coupons

Making a New Year’s resolution to use as many discounts and coupons as possible can add up to some serious savings over time. That could include shopping around for insurance coverage to see if you can lower your premiums, turning the thermostat down or up to save a little on your utility bills or using coupons and discount codes when you’re shopping. For some extra motivation, keep track of how much you save throughout the year–the total may surprise you!

8. Improve Your Credit

Many people are worried about their credit or actively trying to build their credit scores. To build your credit, you have to know what goes into your credit score and which category yours may need a little extra attention in. 

Your credit score is made up of whether you make your payments on time, how much debt you have, what kind of debt you have, the number of inquiries for new credit and how long you’ve had credit. A general rule of thumb is to start putting in the most effort on either the most important factors or the one you’re having the most difficulty with. Making payments on time and increasing your amount of available credit are often two of the biggest difference-makers.

9. Cut Unnecessary Expenses

It’s simple math: The less money you have to spend every month, the more money you’ll have for savings. While cutting back the grocery spending or decreasing your utility bills can give you a little more space in your budget, you may also be spending money you don’t need to or even know about. Take a look through your last month or two of expenses and see if there’s anything you can cut, such as a gym membership you don’t use, subscriptions to apps you don’t want or free trials that have expired that you’re now paying for.

10. Focus on the Journey

It’s important to keep in mind that changing your financial habits isn’t always easy and takes time. You may find that you do great with budgeting one month but then struggle the next. Beating yourself up or having unrealistic expectations may actually make it harder to stick to your resolutions because once something doesn’t go exactly right, it can feel like a failure. Instead, reframe it as a learning experience. Evaluating what happened and what you can do to prevent it from happening again can help you stay on track and navigate the bumps in the road.

Remember that you don’t have to tackle all–or even most–of these financial resolutions in one year. Even incorporating just one or two can make a big difference in your bottom line and your long-term financial goals.

DISCLAIMER. The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only. 

Author BioOrlando is a writer and content specialist for the credit.com team committed to creating helpful, informative and eye-catching content. He completed his undergraduate work at the University of Utah focusing on Film and Media Arts. He’s written blogs and journalistic content for many different industries, and narrowed down his niche to the financial industry. In his off time, Orlando puts effort into crafting creative content around the arts.

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