2023 is over! It taught us many lessons: seizing new opportunities, reaching horizons, or even exploring something new. It surely had something unique to offer for all of us.
As we glaze over the year gone by, we look at the goals we did and did not achieve. Yes, most of us will work towards the classic New Year resolutions.
But this is also the perfect time for financial goal setting, as every year brings its twists and turns. An upcoming year may bring financial uncertainty through spiked inflation, interest rate hikes, or a volatile economy. Creating your New Year’s financial resolutions will be key to navigating the financial year ahead.
If you want to alter your financial reality this new year, this blog is exactly for you. In this blog post, I will lay out certain suggestions that one can apply while building their New Year’s financial resolutions. Let’s get started!
Succeeding with your New year’s financial resolutions
How many times have you set a New Year’s resolution that you failed to keep after the first month? It’s more common than we like to admit.
Personally, this has happened to me a few times and left me pondering what caused my resistance.
This changed when I approached goal-setting from a different lens. So if you want to set new goals this year that you can practically achieve, grab a big piece of paper, and let’s begin.
Before you begin setting your goals for the current year, you want to take a moment and reflect on the previous year by asking these questions:
- What went well in a particular area of your life? State the reasons.
- What are the areas you want to focus on in 2024?
- In what area of your life do you find yourself naturally taking action?
- What area do you unknowingly fall behind in acting upon?
Then, after reflecting on these questions, you want to pick one or two areas as the main focus of your goals for the year.
With this insight, you can now work towards building an action plan and taking micro-steps towards your goals to make them achievable and stay motivated.
We will be employing the EXACT goal-setting approach to make achieving our new-year goals effective and holistic. This method is often used by coaches as it aligns with a person’s values and capabilities to perform.
The EXACT method follows the below-mentioned framework for goal-setting:
Explicit → Focused on one area
Xciting → Has to be positively framed
Assessable → A measurable goal
Challenging → stretching your limits
Time framed→ Have 3-6 months
Let me explain how to apply this method to your goals by giving a personal life example:
For the year 2024, I want to focus on health in all aspects: physical, mental, emotional, and financial. This is rooted in the simple philosophy that “health is wealth”.
So, some of the micro-steps I have in place while applying the EXACT method to my goals are:
- I wanted to focus on one aspect of my life, especially my physical health.
- To do this, I want to have my diabetes levels under control.
- I began researching alternative treatment methods and reducing the dosage of allopathic medicine.
- Sign up for naturopathy treatment sessions.
- Give myself at least 3 months to achieve my goals.
How do I know this works? As I did a similar challenge back in 2017 focusing solely on my health, within months I was able to see noticeable results.
So, I encourage you to take a moment and try out this exercise and apply the EXACT approach to goals or financial resolutions this year!
Want to be enriched by the Wellness Wheel
Exercise now? 😌
Want to be enriched by the Wellness Wheel Exercise now? 😌
Source: 2019 UCLA GRIT Coaching Program.
Wellness Wheel Reflection Tool
Source: 2019 UCLA GRIT Coaching Program.
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I. Assessing your current financial situation
Before setting your New Year’s financial resolutions, take some time to reflect on your current financial situation.
Identify areas where you felt stuck and areas where you made progress in the last year. What did you struggle with? What mistakes could you avoid? How did you make progress in a particular financial area?
Next, you’d want to evaluate your yearly income and expenses minutely. Bring out your bank statements, online banking, and debit or credit card statements that track your spending. Make note of how much money you are spending and where there is room for cutting costs. Use this insight to help you create a better yet improved spending plan for the next year.
Additionally, you want to sit with your savings, investments, debt, and credit score for the year.
This end-of-year financial planning exercise will prove beneficial in terms of identifying areas for improvement in the following year.
II. Writing a New Year’s financial script
Bring out a pen and book to write down all of the limiting beliefs you carry about money. There is no judgment here; try and let this be an illuminating exercise. What are the inner dialogues you carry around in certain financial areas of your life? Be it saving, spending, or earning money, write it all down!
This exercise may require you to get up close and personal with your thoughts. But the payoff will be worthwhile. After you have your thoughts and feelings down on paper, take a moment to reflect on them. Observe how certain financial beliefs are unconsciously affecting your behavior and decisions.
Take the limiting beliefs from this exercise and reframe them into something positive on a fresh page.
For example, a belief like “I’m not good at handling money” can be positively reframed into “I’m getting better at managing my finances. Adopting a new script around money will help you acknowledge and overcome these negative assumptions.
III. Setting New Year’s financial resolutions
Are you creating new goals for the new year? It’s almost a custom. And the same goes for your financial goals; you don’t want to miss out on anything.
Write down all of your financial goals that you can bring to mind. Some may be big and scary, while others are specific and measurable. There is no pressure here; try and express your goals as freely as possible. Even if they seem unrealistic to achieve in a year, let go of judgment. Get them on paper.
You want to break down each goal into actionable steps. By working your way toward these goals through actionable steps, you can make them attainable.
IV. Creating a budget
New Year’s financial resolutions will feel incomplete without a budget. After drawing up your financial goals, spending habits, and income, you can work on a budget for the year.
A budget will decrease the impact of financial shocks a year may bring.
You can create a monthly budget planner for the year to manage your spending more effectively. This will further help you identify areas of overspending in the previous month. Through each month, you also want to keep room for flexible alterations in the budget. Also, you want to have a review week after a few months to see if you are on track with your budgeting goals.
V. Building a savings plan
Want to work on a New Year’s savings plan? How about trying the 52-week savings plan challenge?
For 52 weeks, you will be saving the corresponding number of dollars with the ongoing week. You begin the 52-week savings plan by saving just one dollar at week 1. And two dollars at week 2, so by the end of week 52, you will have saved 1378 dollars in total.
This savings plan puts you into an intentional weekly saving habit. You can use your calendar tools to synchronize reminders for putting away the necessary amount each week. This will slim down the chances of setting aside money for the challenge.
VI. Invest in your financial education
One of the most important New Year’s financial resolutions is to constantly invest in your financial education. Pouring into your financial upkeep allows you to consistently learn about money and make informed decisions.
Financial literacy equips you to be up-to-date with various financial concepts like budgeting, saving or managing money, investing, dealing with debt, etc. One can pursue this financial education through books, courses, or sessions on finances, talking about finance with friends and family, or even considering professional financial advice.
By investing in your financial education, you are ready to face the evolving challenges a new financial year brings.
VII. Seeking professional financial advice
Signing up for professional financial advice can be one of the unconventional New Year’s financial resolutions. A financial advisor or coach is trained in solving various financial needs and problems. They will help you with the financial uncertainty and stress of your goals.
Are you still feeling overwhelmed? You can begin by researching different advisors or coaches before you take the plunge. When you find a financial coach or advisor you feel compatible with, you can schedule an appointment to discuss your needs.
VIII. Tracking progress and staying motivated
It’s important to consistently review your financial goals and track your progress. With that said, it’s more than okay to recommit if you fall short of your New Year’s financial resolutions. We often place more importance on achieving our goals quickly than making slow yet sure progress.
You can still take a moment to celebrate reaching your financial milestones, no matter how small. After creating your New Year’s financial resolutions, you may feel demotivated and fail to keep up. In such times, don’t forget to remind yourself of why you started.
To consistently stay motivated, you can keep a vision board in sight with your New Year’s financial resolutions. As you gloss over these pictures daily, they will impact your mind and remind you of your goals.
Lastly, while carrying out your New Year’s financial resolutions, it’s important to not be too harsh on yourself if you fall short of your goals. By making the most of your financial resources, you take a step closer to a financially holistic future.
