In the quest for a more stable financial future, setting New Year's resolutions can be an effective way to get you started on the right path. With the correct financial goals and strategies in place, you can take control of your finances and make progress toward achieving your financial aspirations.
As we enter a new year, now is the perfect time to start thinking about what financial resolutions to set for 2024. In this article, we'll discuss 7 of the best financial resolutions to help you achieve your financial goals and how to achieve them.
So, without further ado, let's delve into these resolutions and make 2024 a year of financial stability and success.
Resolution #1 – Create A Budget
We'll start things off with the basics – a budget. If you don't have a budget already, creating one and sticking to it is one of the best New Year's Resolutions you could make. This can be somewhat daunting, especially if you have never done it before. However, it is an essential step towards achieving financial stability and success. Here's how to get started:
- Determine Your Total Income (Salary, freelance work, and anything else you make)
- List All Expenses (Rent, utilities, loan payments, groceries, entertainment, and travel)
- Categorize Your Expenses (Divide your expenses into categories like housing, transportation, food, entertainment, and savings)
- Set Spending Limits (Assign a specific dollar amount to each category based on your income and priorities)
- Track Your Spending (Keep track of your expenses and compare them to your budget regularly)
- Adjust your budget (Adjust overtime accordingly)
Using online tools like our budget calculator can be a great way to calculate these amounts and get your budget set up. The key to sticking to your budget is to be realistic, set clear goals, and avoid impulsive spending. Consider using the cash envelope system for specific categories like grocery shopping and entertainment.
Resolution #2 – Build An Emergency Fund
Our world is uncertain, and it's wise to set up an emergency fund as part of your overall financial planning. If you don't have an emergency fund, or it's not as large as you'd like, consider adding this to your list of financial New Year's resolutions. Unexpected events such as job loss, medical emergencies, or unexpected home repairs can set back your financial goals and derail your carefully laid plans. However, an emergency fund can help you weather these storms and stay on track, even during unsettled times.
The next question is, how much should you aim to have in your emergency fund? The general recommendation is to have enough money to cover 3-6 month's worth of living expenses. This amount may vary depending on your individual circumstances, such as your job security, health, and family situation.
If you're staring at a zero-dollar balance in your emergency fund, getting started can be challenging. This is especially true for those who live paycheck to paycheck. Just start small and be consistent. Make this the top priority for anything you can save. Even if it's just $20 or $50 at a time, this will add up over time. You could also consider setting up an automatic transfer from your checking account to your savings account to ensure that you are consistently saving towards your goal.
Resolution #3 – Review Your Subscriptions
The new year is also a great time to take a look at your monthly and annual subscriptions. Subscriptions like streaming services, gym memberships, and delivery services can add up quickly. Do you know how much you're currently spending on recurring subscriptions? Are you sure you need all the memberships you are currently paying for? It's essential to review your subscriptions regularly and cancel the ones that you aren't using or don't need.
There are tools out there that will facilitate the management of all your subscriptions from one place. Many of these tools have free options. However, others are subscription services in and of themselves. If you don't like the idea of signing up for another subscription just to manage your other subscriptions, you can just do this manually.
Go through your bank statements and make a list of all your subscriptions that recur each month. Then, go through and find any and all annual subscriptions. Note the cost of each of these. Finally, determine the subscriptions you no longer need or rarely use. You may be surprised at how much money you can save by eliminating unnecessary subscriptions.
Resolution #4 – Invest In Yourself
The first three resolutions we've covered in this list consist of finding ways to save money. This resolution focuses on how you can increase your income, an equally important part of improving finances. Consider learning a new skill that you can use to make more money in 2024. This could be a skill to use in side hustles or an entirely new career. Be sure to do your research on the skills you want to pick up and ensure that they are in high demand and are valuable to the industry you want to jump into.
Another skill you could pick up in 2024 that could help you grow your income is investing. Learn basic investing principles. Consider investing in low-cost index funds or starting your first retirement account. These small steps can be incredibly helpful down the road.
Resolution #5 – Commit To Avoiding Lifestyle Inflation
Over time, it's likely that you will make more money as your career progresses. Perhaps you are aware of an upcoming promotion this year, or you may be up for a bonus. One financial resolution for 2024 is to commit to avoiding lifestyle inflation.
Lifestyle inflation is a reference to the temptation to increase your spending in correspondence with increases in your income. Resist this urge and save your additional income or invest it. This is the foundational habit of the most financially successful individuals.
Lifestyle inflation can also occur because of social influence. Be mindful of the friends and people you associate with. Think about whether or not they are a good influence on your spending habits. As humans, we have a natural desire to imitate and try to impress our peers. Consider making a commitment this year to avoid these financial pitfalls. If needed, make new friends with people who are on a similar financial path toward saving and responsibility. Positive peer pressure can be excellent for keeping you on track. Plus, working together, you and your friends can come up with new, fun ways to relax and enjoy life without spending too much.
Resolution #6 – Start Cooking At Home
Now, this one may depend on your confidence in the kitchen, but cooking at home is an excellent way to save money and can be a great financial resolution for the new year. Think about just starting small and committing to consistently cooking one meal (say dinner) each weekday for the entire year. Cooking at home doesn't have to be complicated or time-consuming. There are plenty of quick and easy recipes available online that can be prepared in 30 minutes or less. You could also try meal planning and prepping your meals in advance to save time during the week.
Not only is cooking at home a cost-effective option, but it's also an excellent way to improve your health. When you cook at home, you have control over the ingredients you use. This can be a big factor in maintaining a healthy diet. Cooking at home can also be a fun and rewarding experience, so why not try out some new recipes and enjoy the benefits of good home cooking?
Of course, with the right credit union, eating out occasionally doesn't have to leave you feeling guilty. Using your PFCU card at participating restaurants can actually earn you cash-back rewards that you can use to strengthen your financial position.
Resolution #7 – Use Credit Cards Responsibly
Credit cards provide greater convenience and financial security than many other forms of payment. However, limiting their usage is important to achieving financial stability. When used irresponsibly, credit card debt can become a burden and a source of financial stress. Consider committing to responsible credit card usage in 2024. Only spend what you can afford to pay off each month, and avoid carrying outstanding balances. Pay your bills on time to avoid late fees and interest charges.
The other benefit of using your credit card responsibly is that it can help you improve your credit score. Limiting your credit card usage leads to lower credit utilization and improves your score over time.
Have An Ally On Your Side – How PFCU's Services Can Help
The entire team at the PFCU is here to serve our members and give you the tools and support you need to achieve your goals. Use our mobile banking app to keep track of your spending and pay your bills on time. Take advantage of our purchase rewards program to start earning cash-back rewards when shopping with your PFCU card at participating shops, restaurants, travel destinations, and more! Plus, if you have any questions about your financial goals, we offer free tools, classes, and guidance to help you on your journey to financial stability and peace. Become a member today!