A new year means a fresh start. If you’re one of the many people who creates a yearly list of New Year’s resolutions, you know how tough it can be to stick with it. Maybe you set a goal to exercise more but got caught up with work or your personal life. It happens, and it’s completely OK. Remember that progress and effort are still valuable steps toward reaching your goals.
Many people also set their sights on improving their financial health. In fact, a recent survey shows that 66% of Americans’ New Year’s list included financial resolutions. The survey also found that over half (53%) of those respondents made paying off debt a financial goal. Depending on the amount of debt you owe, paying it off could take over a year. However, this is a great long-term goal, and making yearly progress is key.
Common financial New Year’s resolutions
There are various money-related goals people set going into a new year, and they can all be accomplished through financial discipline and a bit of hard work.
Paying off Debt
As mentioned above, paying off debt is one of the most common financial goals for the new year. Perhaps you’re starting the year struggling with credit card debt, personal loans, or medical debt. While debt can be a major hurdle, it can be overcome.
Begin by creating a budget, if you haven’t done so already. Managing your expenses carefully can help you keep more money in your pocket—which can then be used to pay down debt.
Determine which expenses you can cut out and decide how your money will be split. Many people follow the 50/30/20 budget rule in which 50% of your income is reserved for needs, 30% is reserved for wants, and 20% goes into your savings.
There is no one-size-fits-all budgeting solution since everyone’s financial circumstances are unique. For example, you may find that a portion of your “wants” category can be used to pay off debt instead. Keep in mind that New Year’s resolutions often involve making sacrifices, which will eventually pay off in the long run.
If you carry unsecured debt, consider enrolling in a debt relief program. Start by researching different companies and finding the one that can best help with your financial situation. If you qualify, debt specialists will negotiate with credit card issuers and lenders on your behalf—there is a chance you may only pay a fraction of what you owe. Depending on the program and your debt amount, you could be debt free in as little as 24-48 months.
Growing your savings
Will this be the year you make your dream purchase? Perhaps your New Year’s resolution is to buy or save up for a house, car, or even a much-needed vacation.
You may also be looking to build an emergency savings fund. The COVID-19 pandemic proved that it’s best to be prepared for unexpected events such as an illness or job loss. According to a recent Plinqit report, 32% of Americans are saving for a long-term emergency fund and 28% are saving for a short-term emergency fund. If you don’t already have an emergency fund, it’s strongly recommended to create one and contribute to it regularly or as often as possible.
Once again, budgeting is key here. Start by determining which expenses you can eliminate or reduce. For example, you can cancel any subscriptions you’re not using or make your coffee at home instead of stopping at your corner coffee café every morning. If you save part of your monthly income for “wants,” see if there’s any portion that can go toward your savings instead.
Finally, consider finding a roommate or downsizing to save on living costs. If you can live rent-free with your family, take advantage of the opportunity and save more of your hard-earned money. And remember—this doesn’t have to be a permanent solution. Temporarily adjusting your living situation can help you save up for more comfort and personal space down the road.
Boosting your income
Having more than one income is a great way to help pay off debt or add to your savings.
Consider finding a part-time job with requirements that match your skills and expertise. Most of them have flexible hours and some will even let you work from the comfort of your own home.
If you’re a social media maven, pick up a social media manager job on a freelance platform like Upwork or Fiverr. Experienced drivers with strong navigation skills can apply to rideshare services like Uber or Lyft. If you’re more comfortable driving solo, consider delivering food through apps like DoorDash or Uber instead.
Any hobbies like painting or photography can also be turned into side hustles. For example, you can sell your artwork online and set your own prices.
While having a side job can be highly beneficial when boosting your income, you don’t always need one. If you have any gently used clothes or other good-as-new items lying around the house, you could sell them online. Sites like Facebook Marketplace, eBay, Mercari, Bonanza or Poshmark allow you to set prices for the items you list. You may have to pay a small fee for the use of their site.
Improving your financial knowledge
If you struggle to grasp financial concepts, you’re not alone. A recent survey shows that only 57% of American adults are financially educated. A lack of financial literacy can hold you back from achieving personal finance goals such as paying off debt or building wealth.
Fortunately, there’s a wide variety of personal finance resources to help you get started. Books, podcasts, and video series are all accessible educational tools that can break down basic finance principles for beginners. They typically cover topics like credit card management, paying off debt, budgeting, investing, credit scores, taxes, and financial planning, among many others. Remember that it’s never too late or early to begin learning about personal finance.
Stay on track
You don’t have to be a personal finance wizard to accomplish your financial New Year’s resolutions. With self-discipline and hard work, you can improve your financial health not only for this year but also for the future.
