Nine common financial resolutions and how to stick to them
As the new year begins, many of us re-evaluate our financial habits and set resolutions to achieve greater financial stability and security. Setting clear financial goals can be transformative if you aim to save more, reduce debt, or invest in your future. However, sticking to these resolutions can be tricky if you don’t have a clear plan. So, with that in mind, here are nine common financial resolutions and practical strategies to help you stick to them.
1. Build an emergency fund
An emergency fund is the financial safety net that can help you navigate unexpected expenses, such as medical bills or car repairs, without derailing your budget. There’s nothing wrong with starting small — aim to save at least $1,000 initially, then work towards three to six months’ worth of your average expenses. A good tactic is automating your savings by setting up automatic transfers to a high-interest account. To fund it, try to cut out any non-essential expenses by identifying areas where you can reduce your spending, such as dining out or subscriptions, and redirect those funds to your emergency savings fund.
2. Pay down debt
Whether it’s credit cards, a personal loan, or store cards, paying down what you owe is a key step towards financial freedom. You can first pay off the smallest debts for quick wins or target debts with the highest interest rates to save money long-term. Another solid strategy is consolidating your debt by combining multiple debts into a single loan with one regular repayment. Set realistic monthly goals and track progress to help keep you determined to get to the finish line.
3. Save for a specific goal
Whether your goal is a home deposit, a dream holiday, or maybe upgrading your car, setting a clear savings target is a powerful motivator. Start by defining your goal, and be specific about how much and when you need it. Mobile apps like PocketSmith or Frollo can help track savings and visualise progress, and both are available for iOS and Android. Another tip is to keep your savings separate from your everyday spending to avoid the temptation to buy things that distract you from achieving your goal.
4. Create and stick to a budget
Budgeting is the cornerstone of financial success, but many struggle to stick to one. Here are some tips to make it work for you:
- Use the 50/30/20 rule - allocate 50% of your income to needs, 30% to wants, and 20% to savings or debt repayment
- Use budgeting tools - apps like Frollo and Goodbudget can simplify tracking expenses
- Review monthly - assess your spending and adjust as needed to stay on track
5. Start investing
Investing can seem intimidating, but it’s one of the best ways to grow wealth over time. It’s easy to start small using platforms like Raiz or Spaceship Voyager, which allow you to invest with as little as $5. You can also learn the basics through free resources like the ASIC MoneySmart website to understand investment options. The most important aspect of investing is to think long-term, set realistic expectations, and avoid reacting to short-term market fluctuations.
6. Improve your financial literacy
Understanding money is the key to making better financial decisions, so improving your financial literacy is essential. You could follow blogs, books, or podcasts such as The Barefoot Investor or My Millennial Money, or enrol in free or affordable online learning, like those offered by ASIC’s MoneySmart or Skillshare. No matter how you learn, it is vital to engage with your finances by setting aside time each week to review your accounts, spending, and progress towards your goals.
7. Protect your financial future
Securing your future involves preparing for unforeseen circumstances and planning for retirement. This includes:
- Ensuring you have adequate health, life, and income protection insurance
- Consolidating your superannuation accounts to avoid multiple fees and reviewing your investment options within your super fund
- Creating or updating your will to ensure your assets are distributed as you intend
8. Be more mindful of your spending
Reducing unnecessary spending can free up money for savings or other priorities. So, regularly track your expenses to identify patterns and areas for improvement and practice the 30-day rule - delay impulse purchases for 30 days to determine if they’re truly necessary. It’s also wise to set spending limits by allocating a specific amount for discretionary spending each month and sticking to it.
9. Stick to your resolutions
Sticking to financial resolutions requires discipline, but small, consistent steps make all the difference.
Set achievable goals and timelines to avoid feeling overwhelmed, and acknowledge milestones to stay motivated, whether clearing debt or reaching a savings target. Share your goals with a trusted friend or family member who can hold you accountable.
Final thoughts
Financial resolutions are about creating positive, long-lasting habits that improve financial well-being. Whether you're saving for an emergency fund, investing, or paying off debt, having a clear plan and the right tools can make all the difference. Remember that consistency is key as you work towards your goals and even small progress increases over time.
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