Financial New Year resolutions you can actually keep

January is widely documented as a time when millions of people commit themselves with the best of intentions to achieving their goals (aka New Year resolutions). And with good reason. New Year resolutions give us hope and direction for the year ahead and something to work towards. But the grim reality is that by the time March rolls around most of us have slipped back into old habits and resolutions are all but forgotten.

Change is possible, but the key to making it stick is purpose. Setting a financial resolution that will improve your financial health is within reach as long as it’s uniquely meaningful to you.

Think about what motivates you and what’s really important to you in life. Do you want to travel?  Retire early? Support your children through university? Spend more time with your grandchildren? Give back to the causes you love? Or simply live life without financial stress or worry?

Once you’ve defined what’s important to you, ask yourself: what long term financial goals can I set to help me achieve it? Long term financial goals can then be broken into smaller, more manageable short term goals for the year ahead.

Here are 6 easy financial resolutions you can make (and keep) this year to help improve your financial health and create the future you want:

Get clear on where your money is going

Resolve to revisit last year’s financial faux pas and successes. Early in the year, set some time aside to go through your bank and credit card statements to get an accurate picture of what you actually spent your money on in 2022. Consider the impact it made, for better or worse. For example, were there any areas of overspending for little return? Was there room to contribute more to Kiwisaver to maximise your employer contributions? Did you save as much as you’d planned to?

Knowing what you spend on your home loan or rent, insurance, car payments, subscriptions, and what’s left over to save or spend is important. Jot down the figures on paper, or better yet, put them in a spreadsheet and create a budget. A budget might sound restrictive but the opposite is true – budgets can be incredibly freeing. There are some great free planning and budgeting tools available online, such as those on sorted.org.nz. Once you get used to following a budget, you can start finding ways to free up cash to put towards your future. This is an excellent starting point for turning things around in 2023.

Go on a spending strike

Instead of setting a pie in the sky goal like ‘spend less, save more’, resolve to spend less over a certain period of time. Designate a week, month, or even six month period in 2023 where you quit spending beyond your fixed expenses and necessities. This is a surefire way to stop impulse spending and become more aware of your priorities. If you hit your goal by the end of the period, repeat the exercise, or adjust your goal so it’s more reasonable or ambitious for the next period.

One of the best ways to stop spending is to stop window shopping and looking at things that you want to purchase online. Unsubscribe from retail emails, block social media accounts from retailers you don’t want to hear from, and try not to compare yourself to others. Your future is your own so focus on your own values and financial goals.

Find a better deal

While tempting, set-and-forget isn’t always the best approach when it comes to paying phone, internet and power bills, car, house and contents insurance premiums, and subscription services. If you haven’t shopped around lately, give it a try! Many service companies work hard to beat their competitors and will often beat your current rate. You might be surprised at what you can save by doing your research. Organisations like Powerswitch can help you find real savings, fast.

Work out your savings rate, then bump it up

Saving for the future gives us options later on and allows us to be more prepared for the unexpected. If there’s money left over after fixed expenses and necessities are paid for, at least a portion of it should be saved. It’s helpful to know your savings rate  so what you’re saving can be adjusted in line with income changes. You can calculate your current savings rate by taking the amount you’re saving and dividing it by your total income. Resolve to increase your savings rate in 2023, even if it’s by a little.

The same goes for Kiwisaver. Make sure you’re getting the most out of your Kiwisaver benefits at work by contributing a high enough percentage of your pay to maximise employer and government contributions. If you can afford to contribute more, then do so.

Create a will

Estate planning is critical for helping you leave behind a legacy for your loved ones and any causes you support. It’s better to create a will while you’re in good health rather than be forced to rush estate planning decisions when your health is declining. Estate planning protects your family, your wealth and your assets. If you don’t have a will, make 2023 your year to create one. If you do have a will, then take some time this year to review it. Your family will thank you for it.

Start investing

While it may not be the most straightforward resolution on the list, investing is one of the most effective ways to build your wealth. Over the long-term, the stock market delivers compound returns that can keep up with and outpace inflation. Before you start investing, it’s important that you’ve defined the future you want, you’re clear on your financial goals, you’re comfortable with your budget and you’re in control of (not necessarily rid of) your debt.

If you are wary of investing because of current market conditions or because you’re not sure how the stock market works, then take the time to talk to a financial adviser, financial planner or investment adviser. A good financial adviser will ask you questions about your financial and life goals, and then give suggestions on how to achieve them. They will help you understand the risks and benefits of investing and should be able to help you find investments or managed funds that match your current comfort level when it comes to risk.

Remember, the key to improving your financial health this year is to set realistic targets and remind yourself why you made the resolution in the first place. To help you stay on track, consider getting support from a friend, family member or someone else you can trust. Tell them your financial goals and how they can help you achieve them―whether that’s going out for dinner less or being your ‘check-in’ person so you can update them on your progress.

If you’re looking for more accountability with your finances, a financial adviser can get you moving in the right direction, provide structure and keep you on track.

At Blue Canoe, our aim is to have you earning, saving and investing more to give greater options in life, more freedom of time and less financial stress. We provide a comprehensive range of financial services that guide you through life. We can equip you with the right tools to successfully manage your finances and boost your confidence to take charge of your future.

Book your free consultation with a Blue Canoe financial adviser, or get in touch to learn more.