Financial Resolutions Worth Keeping: Building Better Money Habits

As a new year approaches, many of us embark on the age-old tradition of setting resolutions. While commitments to exercise more or eat healthier often top the list, it's essential not to overlook the importance of financial resolutions. Building better money habits can lead to lasting improvements in personal finances, creating a more secure and prosperous future. 

We’re sharing some actionable financial resolutions that can help you make strides toward financial stability, such as automating savings and cutting unnecessary expenses.

Resolution 1: Automate Your Savings

In an article released by Yahoo! Finance, according to the Federal Reserve, nearly 37% of Americans would struggle to cover an unexpected $400 expense.

One of the most effective ways to boost your financial health is to automate your savings. This resolution involves setting up automatic transfers from your checking account to your savings account or other investment vehicles. By doing this, you ensure that a portion of your income is saved before you have a chance to spend it frivolously.

Automating savings not only helps you build an emergency fund to cover unexpected expenses but also assists in achieving long-term financial goals like homeownership, retirement, or education. The process is simple and removes the temptation to skip a month of saving.

Resolution 2: Create a Monthly Budget

In a survey conducted online by The Harris Poll and released by NerdWallet, 74% of Americans ages 18 and older said they have a monthly budget. 

Budgeting is a cornerstone of financial success. Without a clear understanding of where your money goes each month, it's challenging to control spending, reduce debt, or save effectively. Start by tracking your income and expenses, then create a budget that allocates funds to essential categories like housing, groceries, transportation, and savings.

Using budgeting apps or spreadsheets can make the process more manageable, helping you visualize your financial situation and make informed decisions. Consistently adhering to a budget can empower you to cut unnecessary expenses and direct funds toward your financial goals.

Resolution 3: Reduce Unnecessary Expenses

The average American spends $219 per month on subscription services, according to a study by C&R Research.

Cutting down on unnecessary expenses is a resolution that can yield significant savings over time. Review your monthly expenditures and identify areas where you can trim the fat. This might include canceling unused gym memberships, streaming services, or dining out less frequently.

The money saved from these cutbacks can be redirected toward paying off debts, investing, or boosting your emergency fund. Small changes can add up to significant financial gains, helping you achieve your long-term goals faster.

Resolution 4: Prioritize Debt Repayment

According to the Federal Reserve, the average American household has approximately $5,315 in credit card debt.

Make it a resolution to tackle your debts strategically. Begin by listing all your outstanding debts, including credit cards, loans, and any other obligations. Create a plan to pay off high-interest debts first while making minimum payments on others. Consider consolidating or refinancing loans to lower interest rates and simplify payments.

Prioritizing debt repayment not only saves you money on interest but also improves your credit score and frees up funds for savings and investments. Commit to making consistent, on-time payments, and watch your debt burden gradually decrease throughout the year.

Resolution 5: Invest in Financial Education

Adults correctly answered, on average, 50% of the 28 basic money questions in the 2022 TIAA Institute-GFLEC Personal Finance index, the sixth annual barometer of financial literacy.

Investing in your financial education is a resolution that pays dividends throughout your life. Make it a point to expand your knowledge of personal finance by reading books, attending seminars, or taking online courses. Topics to explore may include investing, retirement planning, tax strategies, and estate planning.

The more you understand about managing your finances, the better equipped you are to make informed decisions, grow your wealth, and secure your financial future. This resolution isn't just about acquiring knowledge; it's about empowering yourself to make wise financial choices that align with your goals and values.

Starting Your Year Off Right

As we enter a new year, it's time to consider financial resolutions that can lead to lasting improvements in personal finances. Automating savings, creating a monthly budget, and reducing unnecessary expenses are just a few actionable resolutions that can make a substantial impact on your financial well-being.

Remember, financial stability is a journey, not a destination. By setting and sticking to these resolutions, you're taking a significant step toward building better money habits and securing a more prosperous future for yourself and your family. At Voyage, we're here to support you every step of the way on your financial journey. Contact us to learn more and start improving your financial journey.