Breaking the Cycle: 3 Simple Money Resolutions that Actually Stick

That time of the year is here when we are busy writing resolutions that we can't keep. But you know one thing, less than 10% of New Year's resolutions are actually achieved. I don't think this would be a great surprise for you. We all have our failed resolutions. But this time, I wanted a change. So I thought about it, researched online, and found out why I kept failing on my resolutions. So in this blog, I will tell you what I found and then 5 money resolutions that will actually work and help you overcome your financial problems in 2023. So let's get started.

Most of the new rear resolutions don't live to see the month of February because of these three reasons. They lack Clarity, They lack accountability, and are not Realistic.

Let's talk about clarity. When it comes to resolutions, most people think along the lines of, I want to get healthy, or I want to make a lot of money. There is no problem in wishing to be healthy or rich. But just wishing for something doesn't make it so. Change takes work and planning, and every plan needs to start with a simple first step.

So instead of wishing to be healthy, make more actionable resolution steps like exercising for 10mts daily or reducing sugar intake to one spoon.

Now I am someone who has seen the inside of a lot of gyms and paid a lot of money on membership fees. I get this motivation boost from time to time, which ends up with me taking a gym membership, going there for 2 3 months, and then after that, only the money leaves home, and I sit on my couch. The problem was with somehow getting to the Gym. The thing missing was the accountability factor. So I hired an online personal trainer last year. And considering the fact that I am still continuing it after 8 months, I would say that's mission accomplished and money well spent. You don't have to pay someone to make you accountable.

Support can come in many forms. It could be your friend, your partner, or even social media. Tweet about your New Year’s resolution for the world to see, or post it on Instagram. Just the feeling that there is someone to check on you will drastically increase the probability of doing it. So now take a moment and think about who will be your accountability partner.

And finally, every resolution has to be realistic. It's always a good goal to earn one million next year, but it's not a realistic goal to aim for if you are a taxi driver. I am not saying a taxi driver can never make 1 million. But it's highly unlikely that it can be done in a year by just driving around people. People either set excessively difficult objectives that quickly become unreachable or relatively easy goals that they quickly become bored with.

You have to find the balance and prioritize the goals you can do over those you want to do. Now applying all that we learned, here are three simple money resolutions you can take in 2023 to get your finances in order.

Track your Expenses

If you have no idea where your money goes, you can't know where to save. An easy way to do this is to use an Excel sheet or an online budgeting tool to track your spending. Or a plain notepad or a book, whatever works for you. Set a fixed time every day and note down your daily expenses.

There is no need to go all in and write down even that 50 cents spent on ice cream. Remember, the idea is to make it simple and doable instead of perfect. Something that gives you an overall picture can be developed into a permanent habit.

Get your budget in shape.

Once you have a good grasp of your expenses, you need to set a budget to cut down on unnecessary ones. For a start, you can apply the simple 50-20-30 budget rule. The rule is to split your after-tax income into three categories of spending: 50% on needs, 30% on wants, and 20% on savings.

Now needs are your essentials, rent, grocery costs, insurance, etc. A new sony PlayStation for your birthday is not a need. It's just nice to have. And don't forget about the savings.

Those who want to go further can set budget limits for each category, such as travel, entertainment, and shopping. But at least a basic budget with limits on needs, wants, and savings is a must.

Pay Yourself First

I know. The moment money enters your bank account at the end of every month, it flows out as rent, taxes, credit card payments, utility bills, and whatnot. So a good New Year’s resolution would be to pay yourself first by moving a fixed amount into your savings account.

Be it 20, 30, or 50%, the key is to set this up on autopilot so that you won't have to remind yourself to do this once the new year's motivation dies down.

If you have a major expense coming up this year, for example, a vacation plan in June that costs around 2000$, set aside around 200$ every month to this vacation fund. If you are new to investing, research an online broker in your country and open a depot account. And then set up an automatic investment plan to invest in a broad market index fund like S&P500 as a starter.

Write down these steps with a due date to complete them. A recession is predicted to hit sometime in 2023. So it would also be a good idea to set aside some of your savings into an emergency fund that can help you cover unexpected but necessary expenses.

Everyone can set resolutions, but a goal without a plan is just a wish. If you can stick to the plan and push through the upcoming months, you can truly change your life.

Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. It is important to do your own analysis before making any investment.