5 Practical Money Resolutions You Can Copy

New Year's resolutions can help you start afresh. And what better time to include money resolutions than the start of the calendar year, right?

When it comes to sticking to your money resolutions, getting off to a good start could make all the difference. The first step is setting up realistic goals with proper financial planning but remember to be sympathetic with yourself if you fall off the wagon at any moment.

See also: 6 Financial Tips for a Prosperous 2022

The power of making money resolutions

You aren’t required to include money resolutions in your New Year’s resolutions list this 2022. But if you wish to improve your financial situation this year, then by all means do so.

Money resolutions are the goals you set up for yourself. Think of them as the finish line you want to reach in the marathon called 2022. By setting up money resolutions, you have a clearer idea of how far you need to go, how many pauses you can afford, and how much preparation you need.

To make sure you start off the right foot, here are some preparations you can take:

Take a realistic approach

One of the biggest mistakes that people make when it comes to self-improvement is from doing nothing to a huge overhaul. This can be quite exhausting and might lead you to stop pursuing your money resolutions altogether because of too much frustration.

What you can do instead is to find a resolution that will take you one step closer to your goals and then work on it for a little bit each day.

Adjust your priorities

If you are not currently making enough money or if you are spending more than you are making, it would be difficult to save any money. In this case, your top priority should be to focus on earning more money rather than saving more money.

Then you’d have more clarity on what steps to take. For instance, you can look for ways to have more income sources. And once you have this settled and you are already making enough money, then you can focus on the next goal, which is to save.

Figure out what works best for you

Figuring out what works best for you can be a difficult task. There are so many options and questions that need to be answered. It's just like figuring out whether you learn best through reading books or through listening to podcasts and videos.

The key is getting clear on what you want and need in a certain situation. If you plan on investing your money this 2022, you first need to figure out what your interests and goals in investing are.

For instance, if you understand the real estate industry, better invest in properties or real estate investment trust. If you aren’t that versed in stocks but is interested in buying shares, then you know you need to equip yourself with more knowledge about it.

5 money resolutions to commit to

Once you’ve covered the above preparations, you can slowly work towards fulfilling your resolutions. In case you’re still unclear what steps to take, we’ve listed five money resolutions you can work on as well.

1. Begin budgeting

Having a good budget is likely to be the key to your financial success this year. A financial review of your income, expenditure, and savings is a part of this process.

Only spend on things that you need instead of things that you want. When you find something you want, wait a week or a month to see if you still want it or just simply ask yourself if you really need it. This way, you can avoid impulse purchases.

When budgeting, you should also keep track of your spending. Finding out where your money goes each month can give you a rough idea of how much you should be saving and how much you can spend on non-essential items.

2. Saving every month

Surprise! Saving money should be part of your money resolutions. However, with so many ways to save money, we often ignore the easiest way to do so.

To start your annual savings, keep $10 every day. At the end of the year, you would realise that you have accumulated $3650. It’s that simple! If $10 is too much, start with a smaller amount and slowly see your savings increase.

Remember to invest the extra money saved before you treat yourself as money can disappear very fast when you are having fun.

3. Paying yourself first

Yes, literally pay yourself. This means that you should be funding your retirement account by setting 15% of your income for retirement.

CPF accounts have many benefits such as being non-taxable and also providing interest which allows our money to be compounded.

Take the initiative to start funding your CPF unless you want to have a difficult retirement life. Oh, and did you know you can invest using your CPF? Here’s everything you need to know about investing your CPF.

4. Paying off debts

If you have a large amount of debt, it is time to do something about it. Come up with a plan to reduce your debt even if you have to make some sacrifices along the way. Whatever the reason for the debt, it is crucial that you have control over how much money you owe. You can reduce your debt by keeping your expenditure to a minimum and increasing your income.

Whenever you know that you have unpaid debts, you will never be able to sleep soundly. Therefore, you should know when to take action before it is too late.

5. Creating passive income

Not having to work for every dollar you make means you can relax, take a step back, and make better financial decisions, which increases your financial stability. Passive income is not limited by your time or effort so it will have a big and beneficial impact when you want to increase income.

Having passive income also means that money will come in without you having to work for it leaving you with more time with your family or other businesses.

Take this chance to re-examine your New Year's financial resolutions. Keeping a checklist throughout the year may be a good idea to keep track of your progress and make any necessary changes.

If you know a financial advisor, consider asking them to help you review your goals and objectives, or join our free bootcamp on creating passive income to discover more ways to improve your finances this year.