5 Resolutions to Improve Your Financial Wellness in the New Year

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The start of the New Year is always a great time to take necessary measures to improve your overall health. Financial wellness is one major element of living a happier and healthier life, as money struggles can cause stress, anxiety, and other detrimental issues. That said, why not focus on improving your finances as one of your New Year’s resolutions?

In my own experience as the CEO and founder of CMA Exam Academy (a Certified Management Accountant exam review program), I have seen firsthand a number of ways that anyone can improve their financial standing.

Here are some money resolutions that will put you on the path towards financial freedom:

1. Set Up an Emergency Fund

You really can never know exactly how the future will pan out — the unforeseen and devastating COVID-19 pandemic is just one example of the need to always be prepared for any situation. Thus, you should ideally keep between 6 months to 1 year of living expenses (monthly rent or mortgage, bills, food expenses, etc.) in an emergency fund.

One surefire way to build an emergency fund is by investing in yourself in a way that will expand your skillset and allow you to build a side business of some sort. For example, you can buy the necessary materials to learn digital marketing, how to create online courses to teach what you know, or buy books or courses on personal finance. With websites such as Upwork or Fivver, it’s never been easier to sell your expertise and make money on the side. The money you make in your new business can be used to build a substantial emergency fund.

2. Pay Off Unsecured Debt

Take a look at your own finances — do you have a high credit card balance that you’ve been paying the minimum payment on for months? Other unsecured debt that you’ve been meaning to pay off? Well, don’t let it bring you down any longer! It’s time to be proactive in eradicating your debt so that you can maximize your long-term financial standing. And with inflation here and a possible recession around the bend, those credit card fees can go up and make it even harder to pay off debt quicker for those who only make the monthly minimum payment. Therefore, my number one piece of advice is to get rid of all unsecured debt as soon as possible.

You can optimize this process through the use of aging buckets — sort your bills according to whether they are late by 30-60 days, 61-90 days, etc., then gather the oldest bills and sort them from the highest outstanding balance owed to the lowest. Then pay off the largest bills in the oldest ‘aging bucket’ and make your way down the list. Taking this calculated, strategic approach will help make the process of paying off your unsecured debt much more efficient and a lot less stressful.

3. Use a Cloud-Based Spreadsheet Platform to List Out Essential Grocery Expenses

You can really boost your savings by following a strict budget. The first step to take in setting a monthly grocery budget is writing down every single one of your recurring essential grocery expenses. These include the cost of personal care items, produce, lunchmeat, etc. Yes, you may be thinking that you could just make a mental list of all of the expenses and then select a general spending threshold to not go over each month, but it can be so easy to forget smaller grocery items (like the cost of toothpaste). Taking the time to list out every single expense will help you select the best monthly grocery budget possible.

Now, it will be wise to use a cloud-based spreadsheet app (like Google Sheets) to list out the expenses, rather than a plain Word Document or Excel spreadsheet. The reason for this is that if you ever need to add on a new grocery expense or remove one, you can easily do that on your phone while on the go. Or, if you spend more on some groceries, you can easily adjust the budget for the rest of the groceries on your phone.

4. Don’t ‘Guesstimate’ the Amounts of Recurring Expenses in Your Budget

One big blunder people make is setting up a budget by ‘guesstimating’ the amounts of recurring expenses like monthly rent and health insurance, rather than just checking last month’s bank statements to get exact amounts. This can really hurt their overall financial health — even if the actual amount of an expense is just a few dollars more than their guesstimate, if that is the case for all of their monthly recurring costs, it can result in a huge difference between what they set their budget at and the amount that they are truly spending. So when setting up a monthly budget, checking bank statements to get accurate amounts is key.

5. Stop Paying for Multiple Entertainment Streaming Services When One Will Do

Are you currently subscribed to Netflix, Hulu, Amazon TV, and other streaming services? Did you purchase a subscription to a particular streaming service just so you could watch a certain show that only they carry? These fees can negatively impact your monthly budget, so make a list of all of the streaming services you pay for and see if you can eliminate all but one of them. You may realize that you were still paying for a streaming service you haven’t used since finishing the show that was the only reason you subscribed to the platform in the first place.”

To Wrap It All Up

With the New Year here, make financial improvement one of your top resolutions to live as healthy and happy as can be. Setting up an emergency fund, paying off unsecured debt, and using a cloud-based spreadsheet platform to list out essential grocery expenses are just a few effective ways to improve your finances in Year 2023 and beyond.

About the Author:

Nathan Liao is the founder of CMA Exam Academy, a top Certified Management Accountant exam review program. As a CMA and CMA coach, Nathan mentors accounting and finance professionals in over 80 countries to earn their CMA certification in as little as 8 months. The unique review framework in CMA Exam Academy has proven to be the key to his students’ outstanding success in attaining their dream of earning the Certified Management Accountant certification. www.cmaexamacademy.com

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