With another New Year on the horizon, it’s a time to think about what we’d like to achieve and accomplish in the months ahead.
It’s common to make resolutions related to personal goals, such as improved physical health, or learning a new skill. Somewhat less common, but certainly no less important, are resolutions related to financial goals, whether it’s greater security or diminished debt.
With rapid inflation and rising interest rates straining many people’s finances, the idea of resolving to get a better grip on spending and saving in the year ahead may sound appealing. If so, take a look through this list of 20 financial resolutions, and see whether you can put some of them into practice in 2023.
1) Set up automatic transfers to help build your savings – It’s hard to find anyone who doesn’t want to save more of their own money. While this may seem challenging, there are ways to make it easier. One of the best is automatic deductions or transfers that put a portion of each paycheque into a high-interest savings account or TSFA. The idea is to set it and forget it: you don’t have to remember to make a regular transfer, and moving the money elsewhere helps control the temptation to spend it.
2) Establish an emergency fund – Financial experts commonly advise building an emergency reserve of cash, say three to six months of salary, to be used in case of job loss, health problems, or other unforeseen issues. While getting there may seem daunting at first, the most important part is getting started. From there, it’s about the discipline to keep contributing whenever you can until you reach your goal, even if it takes multiple years.
3) Save more for retirement – Do you make regular contributions to an RRSP? Doing so can help reduce your income tax burden, so it’s almost always a wise idea. Some people are fortunate to have employers who will match contributions to a pension plan, which is a great way to grow your nest egg. Get started as early as you can, so your money has more time to grow before your golden years.
4) Name your beneficiaries – If it’s been a while since you did this, take the time to make sure your money will go to the right people after you’re gone. If you’re recently married, or have had children since last doing this, you’re likely overdue for an update.
5) Change your spending habits to boost savings – Do you drive to work when taking public transit would be a cheaper option? Do you eat out often and spend more on food than is necessary? Perhaps you struggle to resist sales on designer fashions, or pricey vacations. Boost your savings by working to identify lower-cost alternatives to your spending vices.
6) Search out a side hustle – One of the best ways to save more money is to earn more money, and the best way to do that is by doing something you enjoy. Whether it’s selling handcrafted items through an online store or providing a unique service, there are endless options that can help increase your income.
7) Improve your credit score – Interest rates have been on the rise all year, making borrowing more expensive. If a history of bad credit has made it hard for you to borrow money at the best available rates, now’s the time to tackle your credit score. Automate bill payments to make sure they get paid on time and in full, and try not to use too much of your available credit – a usage rate of around 30 to 35 per cent is best.
8) Create a personal budget – If you don’t already have one, a budget is the best way to track your spending and get a good handle on where your money goes. You’ll also be able to identify how much extra there is, if any, for saving or investing. List all your regular expenditures and add them up, then compare that total to your income to see what the difference is. Look for places to trim spending so you can boost your savings.
9) Set up a debt repayment plan – If you’ve got sizable non-mortgage debt, such as credit card bills or a car loan, it can feel crippling and cause significant stress and anxiety. Give yourself a break by setting up a plan to tackle your debts and wipe them out. Several different methods exist – if your debts are large enough, you may want to consolidate them into one.
10) Make a list of your financial goals – Most of us have ideas in our mind about what we want to be able to do with our money. It could be a home renovation project, a family trip, or possibly a second property. Other goals are more modest, but no less important to the individual. The best way to achieve those goals, however, is to put them down in writing, which helps make them more concrete, and is a helpful first step towards making a plan that can turn financial dreams into reality.
11) Find a trusted financial advisor – You don’t have to be a multimillionaire to benefit from the advice of a financial advisor. Professional advice can be helpful to people from all income brackets. In some cases, you may not even require professional assistance, just the ear of a trusted friend, relative, or confidante who can be a sounding board for financial decisions.
12) Improve your financial literacy – The financial world is full of jargon and scenarios that can be confusing or intimidating for those who lack the appropriate understanding. Invest in yourself by committing to learn more about personal finance, whether it’s through books, online courses or articles, or whatever options are available. While you’re at it, learn what to be wary of when it comes to financial scams.
13) Schedule regular reviews of your investment portfolio – At least two or three times each year, and more often if you can manage, it’s wise to take a close look at your investments and make sure you’re happy with the mix. The more diversified your portfolio is, the better protected you are against market volatility.
14) Take care of estate planning – It may not be fun, but estate planning is essential for ensuring your financial wishes are respected should you die or otherwise become incapacitated. Make sure your loved ones are taken care of by having a professional prepare a legal will that indicates where you want your money to go after you’re gone.
15) Negotiate better deals – Most of us tend to accept whatever we’re told something costs, whether it’s for monthly cell phone service or an insurance policy. In truth, however, a little haggling can often produce a better price. If haggling isn’t an option, look around for deals and offers, such a group insurance coverage or pooled cell plans through an employer. They’re a great way to reduce your spending.
16) Give bank fees the boot – Bank fees eat into our savings and don’t always provide much in return. If your financial needs are basic and simple, there’s no reason not to shop around for a better offer from a no-fee or low-fee online bank or consider switching to a credit union.
17) Try a no-spend challenge – Whether you choose one day each week or try to go a whole month without splurging on unnecessary items, a no-spend challenge is a great way to cut down (or cut out) impulse purchases while keeping more of your own money. In a no-spend challenge, you make your own coffee and meals, don’t visit stores or shop online, and only put money towards essentials such as food, lodging, and utility bills.
18) Set up an education fund for your kids – Post-secondary education isn’t cheap, and you don’t want to be scrambling to pay for university tuition when your son or daughter is close to graduating from high school. Start early and take advantage of the Canada Education Savings Grant to give your budding scholar the financial boost they need.
19) Invest in something meaningful to you – Socially responsible investing, sometimes known as ethical investing, is a strategy that combines both financial and social components. Whether it’s environmental causes or helping to fight poverty, there are plenty of ways you can make your investments more meaningful to yourself, and others.
20) Give a little bit – Whether it’s during the season of giving, or at any time of year, putting some of your money towards a good cause can be extremely gratifying. You could set up a monthly contribution to a charity of your choice or give some cash to a friend or family member who could use it.