A Guide To Financial Resolutions for 2023

Another year, another daunting list of resolutions to tackle? You’re not alone. Over 80% of new year’s resolutions are abandoned by February! If your resolutions keep carrying over year by year, you might have the (common) habit of setting the same resolution every year that you are just dreading to complete. The thing is, when we’re focusing on our yearly goals, we don’t take into account out financial resolutions. 

Implementing The “Atomic Habits” Method on Your Financial Resolutions

James Clear is an author and speaker whose expertise lies around the question “how can we live better?” As a #1 best-selling author, he is set to educate people on how to accomplish their goals, create better systems, and develop good habits. In his book  Atomic Habits, James Clear explains a framework to find your ideal focus, build a process, and develop the right habits to achieve your goals.

According to Clear, there are 3 layers to personal change: Outcome, process, and identity. When we set our resolutions, most of the time it’s building a new habit. However, the path we chose to start building this habit is the make or break. 

Outcome

Here is where most people start. They build a goal based on an outcome, so for example saying “by 2023 I’m going to lose 10 pounds”. The thing with this type of resolution is that if you lose the 10 pounds by March, as the year progresses, your motivation will fade, you’ll most likely return to your old habits and probably regain the 10 pounds. You’re left chasing the same outcome because you never changed the system behind it. You treated a symptom without addressing the cause. 

Process

One layer deeper, a process-based resolution can be “I will work out at least 3 times a week.” With this type of resolution, there is a better chance that you can develop a positive habit for a longer time. However, setting a process without a powerful outcome can end up in you getting bored, and eventually stopping. Is it motivational to set the goal of working out 3 times per week for the rest of your life? 

Identity

This is the holy grail of resolutions. The most powerful new habits come from the inside out. Instead of saying the above, say “I will become a runner”. When saying that, you are building a habit based on what you want to become, not what you need to do to get there. Most likely by building this identity you will start working out three times a week, and might even lose 10 pounds in the process. 

Building Powerful New Habits For Financial Resolutions

What we’re getting to with this is that these goal-based resolutions are also a very important way of looking at your finances. And as we all love to set our fun resolutions each year, it’s equally as important to set some financial resolutions as well. You can’t save for retirement without setting (and following) a personal retirement goal for yourself, right? You can’t buy a house without being consistent with your payments, savings, or loans. And you can’t pay for a college education without doing some education planning. 

What do these all have in common? A big goal. Retiring in Bora Bora. Buying your dream home. Sending your kids to college.

10 Financial Resolutions For 2023

To help give you a kickstart, we made a list of financial resolutions to add to the list. These easy-to-follow tasks are not only important to any financial plan, but they will also be of great help while you’re working towards your big goals. 

1. Create a Spending Plan

Sticking to a budget is something that requires commitment and a lot of self-control. But rather than focusing on restricting yourself (don’t buy morning coffee, stop eating out, don’t buy clothes), create a plan on how you will spend on the things you need, to make room for the things you enjoy. A spending plan allows you to set money aside every month for your savings, retirement, emergency fund, student loans, or whatever expenses you have on your financial plan, while also leaving you with spending money for the things you know will make you happy. A proper spending plan can give you the freedom to stop restricting yourself, and follow your financial goals at the same time. 

2. Automate Your Savings

One of the most common reasons why people don’t stick to savings plans is lack of organization. By the time you need to set the money aside for your savings, you have a ton of other expenses and you might find yourself skipping a month. And then another month. And the next you might set aside less. Setting up a savings account that automatically pulls a set amount each month or week, will make it way easier for you. 

3. Establish an Emergency Fund

In the case of unforeseen road bumps or financial hardship, an emergency fund will be your savior! We’ve experienced a pandemic the past few years, which is the best example of how things we can’t control can have a big impact on our finances. If you haven’t started building one or are in the process of doing so, make sure this year you set a solid emergency fund this year. Whatever your life stage is, having one is crucial. 

4. Monitor Your Credit Score

Monitoring your credit score and credit report gets left aside most of the time. Your credit score will play a crucial role when it comes to getting access to financing and other financial services. Monitoring it constantly will ensure you are working towards having it where it needs to be. 

5. Review Your Employee Benefits

Have you ever taken a look at how employee benefits can help you save money? There are a lot of things you might not know of! A couple of day-to-day examples include gym memberships, food options, free products, points on corporate travel, or commuter benefits. More long-term benefits include stock options, 401k matches, education discounts, or health insurance. Reviewing all of your benefits will help you find the most effective way to take advantage of them and save more. 

6. Aim for a Promotion

If you feel like a promotion is a realistic option for you this year, work towards it! Understanding what needs to be done on your part, where you can improve, and what your company needs from you is step one. Committing to fulfilling your part and going that extra mile is step two. Your job is a huge part of how your finances will be distributed, and aiming for that higher goal can be a game-changer when it comes to financial planning. 

7. Keep Your Tax Planning Updated

One of the most important aspects of your financial plan should be your tax strategy. As we kick off the year during tax season, make sure you have a solid plan in place for the rest of the year. From your tax refund to your retirement, healthcare, tax credit, or capital gains. You should understand how each tax strategy could be beneficial to your financial plan. 

8. Boost Your Retirement Savings

Your retirement plan is one of the most long-term goals you will have in your life. No matter what stage you’re in, having one and saving for one is fundamental. Use this new year to find the best way to maximize your retirement savings. A very common way of doing this is with employee 401k matches. A financial planner can help you navigate saving and investing for retirement, in order to find the best way to make your money work for you. 

9. Update Your Estate Plan

Have you ever worried about ensuring your legacy is passed down to the right person? The benefits of having an established and up-to-date estate plan are endless. Being consistent in updating your estate plan will ensure your legacy ends up in the right hands. Consider this one especially if you’ve experienced a life-changing event recently. 

10. Catch Up With Your Wealth Planner 

Every item on the checklist can be summarized with this last one. If you have a wealth planner, you understand the value of having someone create a personalized plan for your personal financial goals. 

This year, catch up with your advisor. Show them your New Year’s financial resolutions, and work with them to create a solid spending, saving, and investing plan to help you achieve them.

We can best assure you that a financial advisor is your best asset when it comes to tracking your financial progress, and planning towards your goals. 

New Year’s Financial Resolutions In Summary

This year, implement the Atomic Habits framework to find your focus, understand who you want to become, and the right path to get there. Build goals that will take you towards that horizon, and create a checklist of the things you need to do to start. Not only does it make it more doable, but it also helps you feel more confident about your decisions, and motivated to continue working towards your goals. 

So make that fun New Year’s resolutions list, pick your dream destination, or start that side business you’ve always wanted to start. But most importantly, don’t forget to think about your finances, and throw some important financial resolutions onto the list to make sure you’re still on track!