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10 Money Resolutions you Must Make in 2023
10 Money Resolutions you Must Make in 2023
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10 Money Resolutions you Must Make in 2023

Money254
Farah Nurow
November 25, 2022

New years is the best time to set goals for yourself. It is when you plan to replace your bad habits with good ones. Some people resolve to eat healthily and get fit; others plan to travel more, while others plan to be family oriented. All those are great plans, but do you have financial resolutions for the new year?

Money resolutions are meant to help you save more, pay off any debt you have, and set yourself on a path toward financial prosperity. Money resolutions can help set S.M.A.R.T (Specific, Measurable, Achievable, Relevant, and Time-Bound) to chase the whole year.

Are you wondering what financial resolutions to adopt? This article will explore ten significant money resolutions you must make in 2023.

Read Also: 5 Reasons Why Long-Term Goals Are Important 

Develop New Sources Of Income

The risk of losing a source of income is an uncertainty that keeps every person, employed or self-employed, up at night. It can come out of the blue, and if you don't have a fallback plan, it can be detrimental to your financial future. To lower its effect, it's vital that you diversify your source of income and not be dependent on only one. 

But that's not all; you should prioritise developing new sources of income in 2023 to avoid financial instability and fast-track your financial goals. Multiple income streams will ensure you don't have to worry about missing bills, struggling to save or going into debt. It will help you achieve your goals faster, build wealth, and even retire earlier.

Some of the best strategies you can use to develop new sources of income in 2023 are:

  1. Leveraging your skills, passion, or talent to make money
  2. Invest your money in financial instruments that will generate income
  3. Start a business 

Read Aso: 6 Passive Income Streams That Will Make You Rich 

Overhaul your Budget to Save More 

If your main resolution is to save more in 2023, you need to overhaul your budget and create one that reflects your goal. To achieve this, you first need to decide how much you want to save by the end of the year. For example, if you choose to save 20% of your income every month, the next step is creating a realistic budget you can stick to, which will help you spend the remaining 80% effortlessly.

To create a realistic budget that will help you save more money:

  1. Cut out unnecessary spending 
  2. Account for all your expenses 
  3. Avoid buying consumer goods on credit 
  4. Ensure your budget is tailored to your lifestyle 
  5. Automate your finances 

While you are making efforts to save more money, you should also consider lowering your debts and avoiding new ones. Additionally, you should know why you are saving and pick savings instruments that have better returns and align with your risk tolerance. You should also consider reviewing your budget and savings monthly to confirm you are on track to achieve your goals.

Read Also: 6 ‍Simple Steps to Create a Working Budget‍ 

Automate Your Savings

Developing a saving culture is a challenging task. Without enough motivation and willpower, you will likely miss or forget to save a portion of your income every month. However, by automating the process, you will learn to pay yourself first by making “savings” the first bill you settle. Automatic savings can give you peace of mind, prevent you from feeling guilty when you spend money, and open the door to putting your entire finances on autopilot.

Automating your savings involves adopting strategies to put cash away for future use before it can reach your hands.

One of the best ways to automate your savings is to increase deductibles on your payslip. You can liaison with your employer to make the following deductions that will ensure you are always saving money:

Retirement Savings: Money can be deducted from your salary and sent to your NSSF account or any other registered pension scheme. Some employers can match your retirement contributions helping you save more.

Insurances: Remembering to pay your monthly insurance premiums can be challenging. Your employer can deduct money from your salary to pay for your life cover or your kid's education premium. This type of savings can also increase your tax deductibles.

SACCOs: This is a common saving instrument for many Kenyans. Most SACCOs can allow you to automate your savings by partnering with your employer and offering payroll deductions. 

Read Also: How to Automate Your Finances - Save Time, Money and Stress 

Keep Your Money Where it Will Grow

In 2023, you should aim to keep your money where it will work for you so that it can grow. Keeping money in a savings account can earn you interest, but at best, that's only enough to keep up with inflation. And if the rate your bank offers is lower than the inflation rate, you might be losing money. 

Growing your money involves investing in instruments that generate income or appreciate value. 

Income-generating instruments such as treasury bonds & bills, money market funds, and other unit trust funds can offer high returns than savings accounts. And if you have higher risk tolerance and want higher returns, you can go for equity funds, REITs, or corporate bonds.

Another way to grow your money is investing in assets and vehicles that appreciate and also generate income. This includes real estate, stocks, private companies, land, and SACCO shares. Over time, their values can increase, and you can earn dividends from some and leverage others to make money. For instance, if you have land, you can rent it out or use it for agriculture, depending on its location.

Read Also: 8 Principles of Investing for Every Young Professional

Start Living Below Your Means 

If you want to avoid financial stress and stay stable in 2023, you should take steps to ensure you constantly live below your means. Living below your means involves leading a comfortable lifestyle you can afford and saving a portion of your income for future use. Living below your means doesn’t mean going very frugal or just avoiding debt; it is about balancing your income and expenses.

Having a budget and sticking to it, and cutting unnecessary spending might be a good start, but to live below your means, you must avoid these three financial habits:

Pleasing People: This involves spending money to please others, even when hurting your bottom line. You find it difficult to say "NO" to people, or you make financial decisions to make others happy. 

Impulsive Spending: This habit involves spending money without planning. It can prevent you from saving or sticking to a budget. In 2023, learn how to plan your purchases.

Spending Money, you Don't have: One thing that can prevent you from saving and living below your means is too much debt. This mainly involves taking consumer loans like; Buy Now, Pay Later, digital loans or using credit cards. These loans can be addictive, and they can force you into a debt trap that might be hard to escape.

Read Also: 10 Warning Signs You are Living Beyond Your Means 

Start an Emergency Fund

Financial emergencies are inevitable; how prepared are you? How would you raise the money if you were to face an unexpected expense of Ksh40,000? Will you dig into your savings, take a loan, or start fundraising? Without an emergency fund to caution you, you might have to make financial decisions that can hurt you in the long term.

Consider the case of James and Peter, 30 and 31 years old Bankers. Back in April, their employer downsized, and they were declared redundant. Overnight, they lost their source of income. But only one was well prepared. James had a rainy day fund that kept him afloat for five months till he found a new job. The same couldn't be said about his colleague Peter.

Peter quickly ran out of his savings; within four months, he was dead broke and in debt. He was forced to pack and relocate his family upcountry as he searched for a new job. 

Who do you want to be when an emergency strikes? James or Peter? 

If you want to avoid the predicament that befell Peter, build an emergency fund for your new year's resolution and gradually build it until it can cover at least six months' worth of expenses.

Read Also: Easy Steps to Create an Emergency Fund in 100 Days 

Set Your Retirement Date

Retirement planning is a significant part of financial planning. If you want to spend your sunset years not worrying about money, it's essential that you get your plans underway as soon as possible. And that starts with setting a retirement date. 

To set a retirement date, you first need to consider the lifestyle you want in your golden years. This will, in turn, help you decide how much you should save and how much you need to make in retirement. If you plan to travel the world, your budget might be higher than someone looking to spend their retirement in a peaceful ranch upcountry. 

How early or late you plan to retire will also be a significant part of how you invest and save. A person planning to retire at 45 will likely invest more aggressively than someone planning to retire at 70. 

Finally, setting a retirement date makes your plans more measurable and time-bound. You'll not only be more motivated, but you will also be able to keep track of your goals easily. 

While setting a date, you should also plan for the pitfalls that could arise along the way. You could be forced into early retirement or experience years of instability that can slow you down. With that in mind, set a retirement date but make it flexible if everything doesn't go to plan.

Read Also: How to Plan for Retirement While in Your 30s

Kickstart Your Homeownership Plan

If you are like most people and homeownership is among your top financial goals, 2023 is the year to put that plan in motion. Becoming a homeowner takes more than aggressively saving; it involves a lot of planning that can take years. 

Here are two steps you can take to kick-start your homeownership plans:

Decide on a Budget: How much do you need to afford your dream house, and how long would it take you to save for it? Given how much home prices always appreciate, putting an exact figure on a property could be hard. Consider talking to a real estate agent who can help you decide how much you will need when you're ready based on housing price trends.

Decide homeownership path to take: Are you planning to buy a house in cash, take a mortgage loan or construct one from scratch? The route you take will help you set a date but ensure it is in line with your budget. 

Read Also: 9 Reasons Why You Should Own A Home

Get Your Estate Planning in Order 

Most people often think you have to be super rich to write a will or plan your estate. That is far from the truth. It doesn't matter how small your net worth is or how negligible your assets are. After your demise, you want them to be inherited by your rightful heir. 

But without estate planning, you risk losing even the Ksh50,000 shillings in your savings account after your untimely demise as it will go to the Unclaimed Financial Asset Authority. Your heir won’t receive it; and if your family tries, the process is long and cumbersome.

And that's not all; estate planning allows you to appoint a fiduciary to oversee your estate distribution. They can also help make financial decisions in your absence or when you cannot make rational decisions due to illness or mental health issues. 

Making Estate planning part of your 2023 financial resolution will ensure that your dependents are well taken care of, you avoid probate and paying high taxes, prevent disputes among heirs, and you fulfill all your philanthropic goals.

Read Also: Why Estate Planning is Important in Financial Planning

Get Adequate Insurance Coverage

It's easy to write off insurance as a waste of money. But if you want protection against substantial financial burden during a crisis, it's vital that you get yourself adequately insured. For small monthly premiums, insurance allows you to transfer financial risks and considerable expenses to your insurance provider. 

Getting adequate insurance can give you peace of mind knowing that you have a backup in times of emergency. Insurance can also help you secure your future, protect your dependents, and encourage a saving culture. 

Some vital insurance you should ensure you have in 2023 include:

  1. Health insurance 
  2. Life insurance 
  3. Income protection insurance 
  4. Disability insurance 
  5. Home/renters insurance 
  6. Auto insurance (if you own a car)

Read Also: Money and Me: Insurance, a True Life Saver

WRAPPING UP

Setting financial resolutions is one thing; achieving them is a different ball game. It will require commitment and constant follow-up. A few months into the new year, new distractions will come, and before you know it, the year is over, and you've ticked nothing o your list. 

One big mistake that can prevent you from accomplishing the goals you've set for yourself is trying to do them all at once. This will cause burnout, and you'll easily be overwhelmed. Take baby steps, and move to the next resolution only after you've accomplished one or got the wheels rolling on them. For instance, you can start by committing to leave below your budget and following that up by overhauling your budget.

Finally, you should know that taking new financial steps and stepping into unfamiliar territories can be dangerous. For that reason, ensure you do enough research and consult a financial expert whenever you feel stuck or in self-doubt. 

Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.

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