This Is the Year: Financial Resolutions That Work
January is around the corner and now is a great time to start thinking about financial goals and better spending habits. Resolving to be better with money would put you in good company: in 2021, 30% of Americans said they set a New Year’s resolution about living more economically (Source: Statista).
With any resolution, it’s important to be realistic about what’s achievable. The best resolutions are the ones that you can stick to for the whole year, and hopefully beyond. It also helps to focus on small positive changes to your everyday habits rather than shooting for a big goal or making huge lifestyle changes. Try resolutions with defined goals and actions.
Here are a few of our suggestions for realistic, manageable financial resolutions for 2022:
- Implement the 50/30/20 Budget
Many personal finance experts advise following the 50/30/20 rule: Set aside 50 percent of your income for “needs” like housing, food and transportation, 30 percent for “wants” like streaming subscriptions or going to concerts and the remaining 20 percent towards savings. It’s a good way to see if you’re living beyond your means and making sure you’re putting money away for a rainy day. The rule might not work for every situation, but it gives you an idea of where you could be cutting expenses and how to set your budget each month.
- Choose to Eliminate Excessive Spending
Pick one item each month to spend less (or not spend at all) on. For example, you could stop buying coffee each morning for the first month. The next month, you could get rid of a subscription service and so on. That way, you focus on one budget item at a time and by the end of the year you’re spending less on 12 different things.
- Putting the “Fun” Back in Fund
Put aside a percentage of your paycheck each month to put towards something fun — a vacation, that new gadget you’ve been eyeing, etc. Make sure to track your progress and you could involve your family if you want to share the fun.
- Rewards for Good Behavior
The best way to keep up a good habit financial or otherwise is to recognize your milestones. Every time you put an extra $1,000 into your savings account, you could treat yourself to a dinner out. Being financially responsible doesn’t mean you can’t indulge yourself now and then.
Do you have any financial goals for the New Year? Remember to track your progress, recognize milestones and be kind to yourself if you run into difficulties. The important thing is that you’re making positive changes and going in the right direction.
