We’re only in February and it’s a safe bet that many of you reading this have already given up on your New Year Resolutions. When we think of our ambitions and goals for a new year, we often concentrate on diet and an ambitious exercise regime. It’s rare for ‘financial health’ to be on our minds but the reality is focusing on your finances could be a far more sustainable resolution to help you rebalance your budget and ensure your income and outgoings are under control with a solid foundation for the year ahead.

There are a number of worthy money-based resolutions (some ideas to get you started here) you might consider if you’ve already begun 2023 worried about debt, rising living costs, and without a savings account to tide you over or act as a cushion if an unexpected expense comes your way.

The Guardian reports that managing our finances is more important to happiness and self-esteem than our income, with 70% of people who lack confidence also concerned about financial uncertainty.   

Goal 1: Creating a Monthly Budget 

Budgeting can seem like a huge task, but it’s a relatively simple way to get a handle on what you are spending, what you are earning, and where you can make positive changes to improve your position.

You can build a personal budget over time, starting with a list of all your income streams, adding up the totals, or calculating an average per month, so you know precisely how much you have to play with. From there, you can monitor outgoings, splitting them into:

• Essentials: rent or mortgage payments, phone bills, groceries, fuel, utilities etc.
• Repayments: interest charges, credit card repayments and personal loans.
• Non-essentials: eating out, entertainment, and luxury items.

Once you have tracked your finances for a month or two, you can identify areas for improvement, such as comparing insurance providers to see if you can cut back on costs or capping the amount you spend on non-essentials.

Goal 2: Paying Down Short-Term Debts

Any debts you have will mean you need to pay interest charges, so the quicker you repay and the less you borrow, the smaller the proportion of your income you need to allocate. 

Getting yourself out of debt can also feel like an uphill struggle, but making regular overpayments, even if they are small, can make a remarkable difference and slowly but surely bring down your overall debt.

Short-term debts should be a priority because they carry the highest interest charges – that could include payday loans, credit cards or personal loans. 

The StepChange debt charity has a repayment calculator which you can use to calculate different repayment amounts and see how quickly you can repay your debt. You will likely be surprised at how much faster you can settle a loan by marginally increasing your repayment value. 

Goal 3: Open a Savings Account

When you have paid back any short-term borrowing, the next target is to start saving. Most financial advisers recommend having enough savings to cover your living costs for three to six months. Still, even a small savings pot can be reassuring that you have a fall-back plan if your income drops or you suddenly need to pay for an unplanned expense.

Setting up automatic deposits from your pay check is a great idea because it means you won’t have the temptation to spend all of your income on non-essentials and have the peace of mind that your savings are accumulating interest.