Did your New Year’s resolution involve saving more money? If so, you are not alone. Here are some tips for spending less in 2023 and the little things you can do to meet your financial goals as we move into February and beyond.
according to a WalletHub® poll, one in three Americans planned to make financial resolutions for the New Year 2023. The same survey also found that 31 percent of Americans who made a financial resolution want to save more, and 60 percent of people are anxious about their financial situation as the new year begins. With the rate of inflation so high, this is not surprising.
So what can you do to ensure you reach your personal finance goals in 2023? Here are our top tips for some popular New Year’s resolutions.
Resolution 1: Save more money
We all want to save more money, right? Unfortunately, this is often easier said than done.
One of the best steps you can take to start saving money or building an emergency fund is to know where your money is going. This is the first step in creating a budget, and it will tell you some hard truths about your spending habits (we’ll give you budgeting tips in another section). Take some time to see how much you earn and how much you spend. What are some categories you can realistically cut back on, and what can you do to ensure you spend less in those categories?
For example, if you’re spending a lot of money shopping online, you could create minor settings to make it more difficult to buy things online. Some examples could be removing repeat shopping apps from your phone, unsubscribing from retail marketing emails, or deleting credit cards stored in your shopping app accounts.
Now, we get it – some of you might have gasped at the thought of removing shopping apps from your phone. If that’s something you can’t imagine doing, we get it. But if you buy too much, make sure you don’t leave money on the table. At the very least, try to sign up for rewards programs at your favorite stores to maximize your return on investment.
Another good way to start saving? Choose an amount you’d like to save each month and set up a recurring transfer to your savings account. Better yet, set up a portion of your paycheck to go directly into a high-yield savings account.
If you change your mindset and start viewing your monthly savings as just another bill to pay, you may be surprised by the results. Think of it like a paycheck to your future self!
Resolution 2: Debt payment
There are two good methods to use when paying off debt: the debt avalanche method and the debt snowball method. Each method allows you to prioritize your debt payments in different ways.
Think of your debt like a mountain. The debt avalanche method has you start at the top of your debt mountain by paying off your high-interest debt first. Using this method, you would rank your debt from the highest APR to the lowest. Typically, your credit card debt would carry the highest interest rate. Working from the top down, you would start paying off your highest interest balance first while making only the minimum payments on your other debts, which could include your car payment, student loans, mortgage payment, etc.
Once you pay off the debt with the highest APR, you’ll move to the next highest and move down the list. This method can save you more money in interest in the long run.
The debt snowball method is a bit different. True to its name, the snowball method has you start at the bottom of the mountain. You would start by ranking your debt from lowest balance to highest balance. Then, start paying off the smallest balance first and slowly work your way up the mountain until you finally reach the largest balance.
While this method may not save you any more money in the long run, it may be helpful in another way. Paying off any debt, no matter how small, can boost your confidence. Earning these small gains early on can give you enough momentum to continue paying off the rest of your debt.
Resolution 3 – Find small ways to earn more and increase your net worth
It’s time to get resourceful and find an easy way to earn extra money!
A passive way to do this is to collect cash from certain credit card rewards or apps like Ibotta®, which offer cash back to users who upload receipts after shopping at certain stores. Little acts like this help turn your everyday purchases into a way to earn extra money.
Another route you can take is to start a low effort side hustle. You may be surprised at the little things you can do to earn money. An easy one can be to sell unwanted items from your home: clothing, furniture, unused kitchen appliances, old children’s toys, etc.
You could also do some research and possibly land a gig by answering surveys, selling stock photos (if you’re into photography), transcribing audio, testing products, and more. If you have the time and means, you could offer your services as a house sitter, babysitter, or pet sitter. You might consider renting your car if you don’t use it often.
While these aren’t exactly get-rich-quick schemes that will land you in a higher tax bracket, a little extra money can now add up all year long. You can use this money to make an additional bill payment or deposit it directly into a savings or investment account; the choice is yours.
Want to know more about your AGI? Check out our adjusted gross income calculator.
Resolution 4: Improve your credit score
Another common resolution is to increase the numbers on your credit score. This number can significantly affect how much money you spend on credit in the future, so increasing it is a great way to save some money for your future.
You can do several small things to increase your credit score:
- Pay off debts and make loan payments on time
- Limit opening new credit accounts if you can avoid it
- Spend only the amount of credit you need (a good rule of thumb is to keep your credit utilization below 30 percent)
Depending on your current score, you can also take advantage of a free service like Experian Boostthat allows you to build credit by paying your regular bills that would otherwise go unreported to credit bureaus, such as utilities, subscription services, or your cell phone service.
Resolution 5: Stick to a budget
Possibly one of the most difficult resolutions to fulfill, right?
Simply starting a budget is the first (and hardest) step. To get started, start tracking your spending throughout the month. Once you understand where your money is going, you can better understand what you can and cannot afford.
As we mentioned, a good strategy is to consider your savings as one more bill that you must pay each month. Add up all your monthly expenses and be sure to include your savings goals.
There are plenty of budgeting apps out there that can help you track your spending and stay on top of it. Some apps even allow you to link your credit cards and loan services for easy tracking.
2023: The Year You Get Financially Smart
Don’t let your New Year’s financial resolution fall by the wayside. Stay honest this year by taking small steps to better understand and build your financial health. Whether you’re saving more, sticking to a budget, or paying off debt, the most important thing you can do is change the way you think. Don’t tackle all of these resolutions at once: To achieve financial success, it’s essential to break everything down into small goals and work your way up to where you want to be.
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