For many Americans, the New Year is a time to make and break resolutions. But instead of vowing to wake up every morning to exercise, what if you set a financial resolution in 2023 that could really change your life? HerMoney has checked with financial experts who say more than can be changed. The key to making it stick is knowing you’re why.
Create a resolution that is uniquely meaningful to you and motivates you enough to take action to keep it. “Look into the future and see what it empowers you to do,” says Brenna Baucum, a certified financial planner with Collective Wealth Planning. So, for example, instead of simply stating that you’d like to increase contributions to your 401(k), think about how it could change your life. Will you be able to retire early? Traveling? Spending more time with your grandchildren? Or living a life free of financial worries?
“I often say there are financial goals, and then there are life goals with a financial price tag,” explains Baucum. “Get out of thinking, ‘If I make X amount financially, I’ll be happy.’ Think about what really motivates you, and then ask: What financial goal can I set that will get me there?”
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Once you know you’re why, here are eight financial resolutions that have the potential to change your life.
Spend quickly
Instead of going on that low-carb diet, put your wallet on one. Alina Fish, the founder of Contessa Capital Advisors, calls it “spending fast.” Set a period of time one week, one month, or six months that you will not spend money beyond your basic needs and fixed expenses like groceries, housing, and utilities. “It’s a way to stop the cycle of impulsive consumerism and become more aware of your priorities,” says Fish.
Be more aware of your expenses
“Many financial New Year’s resolutions are about spending less or saving more, but how do you become more aware of where your money is going?” says Noah Damsky, principal with Marina Wealth Advisors. It’s important to know how much you spend on rent or mortgage, car payments, and subscription services, and how much you have left to save or spend. Take a pen and write these numbers down, or put them in a spreadsheet. This simple step, he says, is “the starting point for turning things around in 2023.“
Constantly spend less than you earn
HerMoney CEO and founder Gene Chatsky have been sharing life-changing financial guidance for more than three decades. One of our favorite nuggets of wisdom is to spend less than you earn, as explained in the book “Make Money, Not Excuses: Wake Up, Take Charge, and Conquer Your Financial Fears Forever.” Why? Because Consistent living below your means allows you to save your hard-earned money, put it in an emergency fund and invest the rest for your future.
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Calculate your savings rate, then increase it
Most people know that they should put more of their paychecks into savings. The first step to increasing your savings is to calculate your current savings ratio. To do that notes Brittany Wolff of Wolff Finance, take the amount of money you save and divide it by your total income. Set a goal to increase your savings rate, even if only slightly.
Delete and block the temptation
One of the best ways to stop spending money is to stop looking at the things you want to buy. Reduce temptation, says Fish. How can you do that? Don’t subscribe to retail emails that promise big sales or free shipping. Remove your credit card information from your favorite online sites. Ask your social media accounts to block your preferred shopping space. Then, reward yourself with a walk in the park instead of online window shopping. Vow to spend less time shopping and more time living life.
Stop keeping up with the Joneses
Sometimes, the list of things we “want” or “need” includes things we don’t really want or need. For example, says Baucum, just because your neighbor has a new boat parked in the yard or your co-worker remodeled her house, doesn’t mean you should spend your money on these things. (After all, there’s a good chance they’re deeply in debt on those purchases.) It’s time to officially ditch comparing yourself to others in real life and on social media and focus on your own values and financial goals.
Decide to take care of your future
Start planning for your future now so you can get your ultimate “why” and the reason you want to make resolutions. That means making sure you’re getting the most out of your retirement benefits at work, including contributing a high enough percentage of your salary to match that employer. And contribute more if you can. Instead of trusting yourself to do this every month, Fish says, automate payments into your savings and retirement accounts first. (What you can’t see you won’t miss, we promise!)
Make yourself a daily priority (with this question).
As women, it is often difficult to prioritize our own needs over those we care for. But just as you’re advised on an airplane to put on your oxygen mask in an emergency before helping someone else, the same philosophy should apply to finances, says Alyssa Krasner Maize, a financial planner and founder of Amplify My Wealth. Don’t compromise your own financial future and confidence while taking care of others.
Before every financial decision, ask yourself: Am I putting someone else’s financial needs ahead of my own? Then make an informed and deliberate decision. “While it may not seem smart to help yourself in front of those you care for and the most vulnerable, it is essential and a life-changing financial solution,” says Maize.
Finally, if you’re looking for accountability with your money, a coach who can guide you step-by-step through your best (and worst!) financial moves, and put you on a path to more freedom and less stress, we recommend HerMoney’s 8-week budgeting course, would like to join us for FinanceFixx. “I’ve finally been able to start paying off my debt because I have a clearer picture of where my money is going and where my money is coming from,” said one participant, Sarah.
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