Despite New Year’s resolutions being notoriously hard to keep, over half of Americans surveyed by MoneyGeek at the beginning of 2022 stated that they planned on making financial resolutions for the coming year.
But with inflation continuing to rise and average mortgage interest rates higher than they’ve been since 2002, you may be tempted to skip your financial resolutions in 2023 and wait until the economic future of the country looks a little bit brighter.
This would be a missed opportunity.
Not only do financial resolutions help you prepare for unexpected expenses, they can also increase your overall sense of health and well-being. In fact, a study by Northwestern Mutual found that 92% of adults in the United States agree nothing makes them happier than when their finances are in order.
“Making a budget for the new year means my expenses never surprise me,” says Margaret Clark, a lawyer based in Savannah, GA. “Being so busy, I can’t stop and think, Oh no, do I have the money for Christmas gifts for my kids’ teachers? Or the cash to pay my accountant during tax season? Setting a budgeting resolution and sticking to it is a form of guilt reduction for me and it makes would-be stressors into passive things.”
Below, four financial experts recommend their top financial resolutions for 2023—and, more importantly, how to keep them.
1. Setting a Budget
You’ve likely heard it time and again, but a budget is a stellar stepping stone for fostering a healthy relationship with your finances.
“The most important thing is to have an idea of what money is coming and going, at what frequency and why,” says Amber Miller, a certified financial planner and founder of Rising Financial, a financial planning firm based in Minneapolis, MN.
Indeed, 85% of people who use a budget says that it has helped them get out of debt, a Debt.com survey reports. An easy way to start budgeting is to download an app like You Need A Budget (YNAB) or Mint and begin uploading your expenses. Miller recommends looking for patterns in your spending once you have your budget established. Use that knowledge to cut back on expenses for services that you don’t use or that might bring you stress—for example, an online streaming subscription for a gym class you don’t use.
2. Planning Ahead for Both the Expected and Unexpected
Given high inflation in the United States of late, your budget may be tighter than ever in 2023, leaving you with less cash across the board, no matter the kind of expense. To combat stress throughout the year, Bobbi Rebell, the author of Launching Financial Grownups and a personal finance expert at financial services firm Tally, recommends marking important events on your calendar—for example, a cousin’s wedding. Then, begin budgeting for the expenses that come with it, like gifts, clothing and lodging.
Include an emergency fund in your planning and budget so that if something happens to you or a family member—an unexpected surgery or emergency room visit, for example—you don’t have to dip into your cousin’s wedding fund to pay for medical expenses. Consider a high yield savings account or a certificate of deposit account to hold this fund and grow it over time.
3. Improving Your Credit Score
The next financial resolution that should make an appearance on your list is improving that credit score. To get the ball rolling, make debt payments on time and in full—if possible. Other necessary steps include keeping old lines of credit open, not opening new lines of credit and aiming to keep your credit utilization—how much available credit you’re using—under 30% of the total.
When you see that score rise from your hard work, reward yourself in some small way, such as with a baked good, fancy coffee or some extra downtime.
But another effective strategy toward keeping this particular resolution is staggering it with others, says Rebell. “Begin with an easier resolution for January to give you that sense of accomplishment—then put some in for each season of the year in your calendar to increase your chances of sticking with them,” she suggests. An easy resolution might be drafting a budget; a harder resolution would be to improve your credit score from the “fair” rating to the “good” rating.
4. Continuing to Invest
With the stock market currently so volatile, staying the course with your retirement savings can feel fruitless at times. You may be seeing articles that encourage you to move your money into bonds, or perhaps you just feel like you’ll skip retirement savings entirely in 2023 and keep more liquid cash to tackle inflation’s impact on your wallet.
But Kevin Mahoney, the host of the Financially Well podcast, says setting a resolution that you won’t touch your investments—and also, that you’ll keep on contributing to them—will behoove you much more. “Stick with your plan even while things are not going your way in the market,” he says. “Historical evidence suggests that the market will bounce back, and you don’t want to allow any particularly strong emotions to hurt you in the long term.” This is especially true if you are in your 20s or 30s with a longer time horizon ahead of you until retirement.
And if you haven’t invested any money yet, there’s no better time than the present to start. Compound interest begins to accumulate the moment you open an account. If this is the year that you’d like to invest, add that line item to your budget and resolutions list and begin to educate yourself. You can even make it fun by watching TikTok videos on the topic.
5. Insuring Yourself
Even if you haven’t had a life-changing event in the past year, it’s a good idea to review your insurance policies and make sure that all your possessions and assets are covered in the case of an emergency. If you’ve made any upgrades to the heating, electrical or plumbing systems in your house, you should notify your insurance agent to make sure the policy reflects these changes. Also, get ready to pay higher premiums for flood insurance (if you aren’t already)—in April, the Federal Emergency Management Agency changed its rates for flood insurance based on a new risk rating, leading to increases for the majority of policy holders.
If you did undergo a major life change like starting a family, consider taking out a life insurance policy that will cover your loved ones in the case of a tragedy. According to NerdWallet, the average cost of a life insurance policy is $26 a month.
6. Saving for a Big Splurge
Not all of your financial resolutions should be rigidly focused on saving alone. Psychologists have found that when you splurge a little, it can act as a type of charge to the brain and even help relieve stress. Mahoney recommends that at the beginning of 2023, you decide what you want to splurge on—for example, a trip with your family or a new set of lawn furniture—and begin saving for that splurge by setting up an automated transfer to a high yield savings account or money market account. “It will be a lot easier to limit your spending in other ways if you know you’re saving for a big goal,” Mahoney says.
Along with giving you something to look forward to, setting the goal early will help you find deals along the way. For example, sales on flights, hotels or goods that come along at certain times of the year can be factored into your overall plan. It will also soften the blow if you need to use some of your splurge fund to pay for an emergency or to cover the rising cost of expenses. “The sooner you start to save, the more cash you’ll have to work with in the end,” Mahoney says.
Brienne Walsh is a writer based in Savannah, GA. She contributes to Forbes, Rangefinder and MarketWatch, among other publications.
Illustration by Darya Semenova
LEARN MORE: The Benefits of a RVC High Yield Savings Account