Financial resolutions for 2023: 6 ways to get your finances in shape

These tips can help you make and stick to your financial resolutions in 2023

Are you making a resolution for the new year? Unfortunately, more than half of all resolutions fail, but they don't have to be yours this year.

We have a few tips to help you make financial resolutions for 2023.

1) Plan your savings

Plan your savings and think about what you can do differently this year. Introspect: Do you want to increase your contributions to your savings? Do you have automatic transfers to a high-yield savings account? If yes, did it help you in the past year?

Analyse your hits and misses from the past year and make plans to save around them.

2) Stick to your budget

This is the resolution you must work on at the beginning of the new year and review every month. Chart out a rough budget and differentiate between your fixed and flexible income. This will give you a clear picture of how much of your income you can invest and how much you can save, and also help you identify unnecessary expenses. You can start by simply writing it down in a diary or using Microsoft Excel to keep track of your money.

Eventually, this habit will familiarise you with your spending patterns and help you customise your budget according to your preferences.

3) Financial literacy and investing

Increase your awareness of personal finance and how to save more and invest wisely. With the number of financial influencers increasing by the day, it becomes all the more important to follow the right advice, and the best way to do so is to become more aware and financially literate. You can start small by picking up a personal finance book and taking a course in financial literacy.

4) Expert advice on investing

Vinay Gupta, equity strategist at Divitas Capital, lists key advice for young professionals while investing:

Timing: On when to start investing, Gupta says it is important to start early because nothing beats time in the market, as one benefits immensely from compounding; therefore, starting as soon as possible implies a higher time for wealth creation.

Secondly, he says it is essential to "build up over time."

"As one's career progresses, the income mostly rises as well; therefore, one should endeavour to increase their SIP amounts in line with these increased incomes," he explains.

5) Look back

Look at what worked for you in the past years and why it worked. Ask yourself, "Can the same approach be applied this year, or do you need to change course?"

Gupta tells Business Standard that people who continued their investments even during distressful times like the pandemic reaped very good returns as markets normalised. On lessons from Covid-19, he adds that consistency is key: "If feasible, then, SIPs should be continued irrespective of the short-term outlook."

6) Debt management:

If you rely on credit cards to meet your expenses, then you should also look to consolidate your credit card debt. Calculate how much money you owe on your credit cards. Try to avoid spending more on those cards where your payments are already pending. Take calculated decisions while purchasing with credit cards.

Also, it is important to keep your loans in mind. Of course, not all expenses are foreseeable, but if there are any expenses you are planning on for which you might need a loan in the coming year, like education, a personal loan, a car loan, or a home loan, plan in advance.