financial resolutions
Updated April 07, 2023

7 Financial Resolutions for the New Year and How to Keep Them

Building Wealth

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It’s easy to let your financial goals slide throughout the year, and this is the perfect time to refocus. A few resolutions can help you identify financial targets and make the right adjustments to meet those goals in 2023 and beyond.

On the other hand, staying committed to your new year’s resolutions can be incredibly difficult. In fact, the psychological component of personal finance is often the most challenging. This article will cover some of the best financial resolutions to consider in the new year along with suggestions to help maintain your momentum over a longer period of time.


1. Start Saving for Retirement

People often think they can afford to think about retirement later, but that’s far from the truth. In reality, saving for retirement from an early age is one of the best things you can do for your financial situation. The longer you put it off, the harder it will become to make up for that lost time.

For example, if you start contributing ten percent of a modest $40,000 salary at age 30 with a 50 percent employer match up to six percent, you could have nearly $750,000 in your 401(k) if you want to retire at age 65, assuming a seven percent average rate of return.

On the other hand, if you wait until age 45, you’ll have less than $400,000 even if you double your contribution percentage to 20 percent of your salary.

Use this 401(k) calculator to run the numbers and develop a clear retirement plan.

While the tax deductions available with traditional retirement accounts depend on the year in which you make contributions, you can make contributions for this 2020 as late as April 15, 2021. This is incredibly helpful if you need a few more months to save money for retirement and presents a great opportunity to start focusing on your savings.

Tax-advantaged retirement accounts have strict contribution limits, so you can’t simply add more later to compensate for the years you missed. Furthermore, compound interest means that earlier contributions end up being more valuable than later ones. With that in mind, you should take retirement seriously in 2023 regardless of your age.

Check out my full video walkthrough below.

Employer Match

While saving for retirement is always important, it’s especially crucial if your employer offers a 401(k) match. Some companies provide a full match, but most match a certain percentage of employee contributions up to a defined limit, such as a 50% match up to six percent of your salary. These programs give you the opportunity to earn an immediate, unmatched return on your 401(k) contributions. For example, a $2,500 contribution matched at 50 percent, for example, immediately turns your $2,500 contribution into $3,750.

Generating such strong returns with no added risk is virtually unheard of in personal finance. No matter where you are financially, you should almost always take advantage of an employer match. If you’re currently on vacation, talk to someone in accounting or HR after the holidays to learn more about your company’s policies.

Traditional or Roth?

The most important distinction between retirement accounts is whether they’re traditional or Roth. Each option comes with its own pros and cons, and there’s no “best” choice. Of course, you can always split your contributions in order to receive the benefits of both.

Traditional IRAs and 401(k)s allow you to deduct qualifying contributions from your taxable income. If you contribute $5,000 out of a $50,000 income, for example, you’ll only owe taxes on the other $45,000. This can lead to a significant reduction in your immediate tax burden.

On the other hand, Roth accounts offer tax advantages in the future. You’ll pay income tax now, but you won’t be responsible for capital gains or taxes on withdrawals after you retire. It’s usually best to focus on Roth contributions if you expect to be in a higher tax bracket during retirement than you are now.

2. Learn About Investing

Investing is one of the most intimidating areas of personal finance, and understanding how to make informed investing decisions takes time. There’s a lot to learn, and you won’t feel confident until you spend some time reading about the relevant concepts and strategies. You should have some time off to learn more over the holidays.

Understanding investment practices is critical for retirement, but you can also invest on your own over and above your retirement portfolio. Developing a good mix of investments will help you generate reliable returns without exposing yourself to unnecessary risks.

401(k) Investment Options

IRAs give you more control over your portfolio, but 401(k) plans are generally restricted to certain kinds of investments. Different plans allow you to invest in different things, and it’s important to consider these limits when comparing different ways to invest.

Lucky for you, many employers have in-house people you can speak to regarding your 401(k) plan’s investment options.  This is the perfect chance to refocus your financial plan and create a portfolio that aligns with your short- and long-term goals.


Diversification is crucial to any approach to investment, and there are a variety of ways to effectively diversify your portfolio. Investing too heavily in an individual industry or company closely ties your returns to particular areas of the market.

In contrast, a broad investment is more likely to succeed over a longer period of time. Index funds, for example, typically include a mix of stocks, bonds, and more, preventing any particular investment from disproportionately affecting your bottom line.

3. Think About Major Expenses

Expensive items can throw your budget off for weeks, months, or years, and we often wait too long to start considering our biggest purchases. While some costs are always unpredictable, you can improve your financial health by projecting into the future rather than taking your budget month by month.

Around the new year, take some time to identify any costs you expect to come up throughout 2023 and estimate how much you’ll need to save to cover them. Instead of coming up with a financing plan on the fly, start saving now so that you’re fully prepared later on.

If you’re planning to upgrade your phone at the beginning of the summer, for example, you have a full six months to put some money together if you begin saving at the start of January. The new year is the easiest time to forecast future expenses, and you can review and adjust your projections each month if anything changes.

4. Get Out of Debt

Like putting off retirement savings, staying in debt is one of the most common financial mistakes.

If you’re only making the minimum payment toward each balance, you’re giving your debts more time to accumulate interest and taking even longer to become debt-free. You should always try to supplement the minimum payment and bring debts down as quickly as possible on high-interest debt.

Debt Consolidation

Credit cards in particular are notorious for charging exorbitant rates. At 20 percent or more, there’s a good chance your payments are mostly going toward interest. Debt consolidation can help you reduce interest rates and simplify the payment process if you’re managing multiple debts.

Debt consolidation loans are available from countless lenders, and most options come with far lower interest rates than credit cards. You’ll receive a loan and make regular payments until you’ve paid off the principal and interest.

Balance Transfer Credit Cards

Alternatively, balance transfer credit cards work like any other credit card and are another popular method of consolidating debts.

Many of these cards give you a certain amount of time to pay off debts without accumulating interest.

In exchange for interest-free payments, however, they usually charge a transfer fee of roughly 3 percent.

5. Create a Will

Many people think of wills as only important for those with a substantial amount of wealth, but the truth is that everyone can benefit from creating a will.

Of course, most of us don’t think about our estate until it’s too late, so making a will (or updating your existing will) is a great financial new year’s resolution.

If you pass away without a suitable will, your assets may not pass how you wanted them to.

With a will, however, your assets will be distributed exactly as you see fit.

There’s no “right” time to create a will, and it’s best to get this out of the way as soon as possible. Keep in mind that an experienced attorney can make this process go quite smoothly and help you avoid making any mistakes while writing your will.

If you’d prefer to save money, there are also a variety of online services designed to streamline the process of creating a will. In short, it’s never been easier to write a will, and there’s no reason not to take an hour or two to get your affairs in order over the holiday season.

6. Build an Emergency Fund

A shocking percentage of Americans don’t have $1000 set aside for emergencies. An emergency fund offers a crucial layer of security, especially if you’re already struggling with debt or other financial obligations.

Emergency Fund vs. Debt

In fact, even before paying off high-interest debt, I would recommend putting together a small emergency fund.  It might sound counterintuitive to focus on an emergency fund rather than debt, but debt is actually one of the best reasons to start saving money. Even a small emergency fund can help you avoid going further into debt later on and losing your progress.

Without an emergency fund, you’ll have to use debt or other savings to cover unexpected costs. You shouldn’t start budgeting for long-term goals until you have an easily accessible fallback. If you put $1,000 away for retirement rather than an emergency fund, for example, you might need to pull from your retirement savings in a worst-case scenario rather than having a separate account for emergency expenses.

That doesn’t sound so bad, until you realize that withdrawing from your retirement account could have adverse tax consequences. Also, what if the market is down? You’d be forced to sell at a loss in order to cover your unexpected costs, which is not ideal.

With $1,000 to cover emergencies, you won’t have to pay any interest at all. On the other hand, if you use a credit card with 20 percent interest to pay for those costs and pay $50 per month, you’ll end up spending $1203 on the same expenses. Carrying a balance should be avoided whenever possible.

Start Now

Building an emergency fund might sound like a long-term process, but you can get a significant amount of money together relatively quickly if you stay committed. If you can find room in your budget for an extra $100 per month starting in January, for example, you’ll be up to $500 by the end of May.

7. Start Budgeting

Each of these resolutions can have a substantial impact on your financial outlook, but it’s hard to make progress without tracking expenses and keeping a reliable budget. Budgeting is one of the first steps toward taking control of your financial situation.

Budgeting Apps

Fortunately, budgeting is more accessible than ever before. A number of apps offer helpful tools for tracking, forecasting, and categorizing expenses along with a wide range of other functions. You can always opt to budget the old-fashioned way if you’d prefer to use a notebook.

While contemporary budgeting apps are highly robust, services like YNAB are relatively complicated and come with a difficult learning curve. If you download an app today, you should have time over the holidays to get accustomed to its features and learn how to budget effectively.

It Takes Time

You can start to move toward other financial goals once you know where your money is going. From there, it’s easy to identify problematic spending habits and make the right changes over time. Taking an honest look at your finances often feels overwhelming, but you’ll feel better once you understand where you’re at and what’s holding you back from making more progress.

Taking personal finance seriously is a learning process, and almost nobody transforms their financial situation overnight. More realistically, reaching your financial goals is about making gradual changes and sticking to them. These resolutions will help you lay the foundation for a healthier financial future.


Alex McOmie

Alex McOmie is a freelance writer for Money Done Right. He joined the Money Done Right editorial team in summer 2019. Learn more about Alex.

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