How to Start the New Year on a Firm Financial Footing

The start of a new calendar year can be exciting. It’s a time to reflect on all you’ve accomplished and plan for new goals. For many people, the new year is the time to reflect on how you’d like to make some big changes.

It’s a time to feel refreshed and tackle any goals or lingering to-do items from the previous year. It’s also the perfect opportunity to take charge of your financial health. If you want to start fresh in the new year, make it happen with some simple changes starting with your finances. Here’s how to start the new year on a firm financial footing.

Create a Realistic Budget

Creating a budget and sticking to it can seem like a basic move. However, it can significantly help you and your family stay on track of your finances. That said, you won’t really know what you’re spending without taking a look to the past.

To create a budget, study your 2021 spending. Sit down with all your financial documents from your credit card bills to your mortgage to your subscription payments.

Once you’ve gathered everything, determine any big patterns of spending. Did a few months get out of hand with your credit card purchases?

Look at what kinds of items or services you purchased and determine their value or worth. Paying a mechanic for new car brakes is definitely worth it. Yet, that week where you ordered takeout every night out of sheer laziness may not be. Don’t judge yourself here; rather, think of it as a learning opportunity for this new year.

Putting a spending limit on yourself can be challenging, so consider switching to a secured credit card. A secured credit card requires you to put down a deposit (or transfer funds to the account), perhaps something like $500 dollars. That figure becomes the card’s credit limit, meaning you can only spend up to that amount. It’s an easy way to restrict your spending without putting too much energy into it.

When creating a budget for the new year, make sure it’s something that’s realistic. You won’t want or necessarily need to turn down every social event with your friends. However, you may want to set aside a certain amount for social spending versus necessary spending.

If you have a family, make everyone part of the conversation. You can hold each other accountable during those moments of financial weakness.

Save a Little More Each Month

Remember that giddy feeling of receiving your weekly allowance? Well, you can take that same happy sensation with you into the new year through saving. Some people fall into the trap of thinking that saving is too difficult or too hard.

By prioritizing saving in the new year, you can take charge of your finances for the better. Just think of how good you’ll feel going into another month or the following year with money set aside!

After you create your budget, you’ll have a better sense of what you are actually buying. Take this information and see whether you can cut back anywhere. It’s time to ask yourself if that $5 latte every morning is actually worth it. Or do you really need six subscriptions to different video or movie streaming services? Eliminating unnecessary purchases is a quick way to start saving today.

Just like your budget, you want to be sure your saving goals are realistic. So instead of a lofty goal to save an extra $1,000 each month, take smaller steps. Make a goal of making your lunch four days a week instead of opting for takeout, for example.

Another tip is to have a goal in mind, such as a vacation or buying a new home or car. Write this big goal somewhere prominent so you can think about it each time you save another dollar or two.

Pay Off Debt

If you’re one of 340 million people in debt, listen up. The new year is a prime time to get it under control. Drowning in debt can be frightening, but fortunately there are many free resources available to help you climb out of it.

Talk to your bank, mortgage company, or financial advisor about your options. You may be able to refinance your home, for example, to help you in the short and long term.

In general, there are two mainstream methods for getting out of debt. With the snowball method, you pay off the smallest of all your debts as quickly as possible. Then take the amount of money you were putting toward that debt and apply it to the next smallest one. This process continues until all your debts are paid, and the amount “snowballs” as the amount gets bigger and bigger. This method is great if you like smaller, more achievable goals.

With the avalanche method, you pay off the debt with the highest interest rate first. Then apply the amount of money you were putting toward that debt to the debt with the second-highest interest rate. This continues until all your debt is paid. This method is great if you are concerned about higher interest rates and your future financial health. Either way, paying off any kind of debt will benefit well into the future.


Don’t let past financial challenges prevent you from making 2022 your year. With the right mindset, you can start off strong and get a hold of your financial well-being. Remember that you are not alone. In 2020, over 70% of Americans had some sort of money resolution for the 2021 calendar year. Yet, many of these people will likely carry over the same financial resolution into 2022.

Setting a realistic budget, saving more each month, and paying off outstanding debt can help ground your financial health. Chances are you will make some slip-ups and that is OK. Remind yourself of your “why,” thinking of how good you’ll feel with better finances in place. And, better yet, think of how good you’ll feel going into 2023 knowing your money is in check. Now, that’s progress!

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