Many of us who made New Year’s resolutions have already long forgotten them.
Resolutions are easy to make but difficult to keep because they require changing our daily habits.
A 2023 study by Forbes Health/OnePoll showed 38% of respondents chose to improve their finances for their New Year’s resolution. Unfortunately, most resolutions last fewer than four months and often don’t have the chance to become habits.
Instead of declaring a resolution that’s enthusiastically launched in early January and quickly abandoned, consider changing your approach. Introduce simple, sustainable practices that can more easily develop into long-term financial habits.
Calculate your net worth
To embrace a new mindset of establishing financial habits, and to improve your financial health, start by taking time to calculate your net worth. Net worth is determined by subtracting your liabilities from your assets. This number will change over time as your savings, investments and debt balances rise or fall.
Although calculating your net worth may sound complicated, the process is fairly straightforward for most people. Begin by making a list of your assets (what you own). Then subtract your liabilities (what you owe). The result is your net worth. This number will serve as a benchmark in future years to help you see whether your overall financial position is improving or declining.
Review your net worth annually, and compare it with the prior year’s figure to understand what has changed. Are you saving more? Has your debt increased? Did the stock market rise or fall? Without a clear understanding of where you are financially, it can become difficult to set realistic goals or plan effectively for the future.
Adhere to a budget
Budgeting is a valuable tool for managing your finances because it helps you understand where your money is going.
Most people know what they pay for their mortgage, rent or car loan, but far fewer keep track of smaller categories, such as eating out or online purchases. Once the meal is paid for or the order is placed, the amount spent is often quickly forgotten. A budget keeps all spending visible, allowing you to make informed decisions with your money.
To establish your budget, start by writing down your net income and fixed monthly expenses, such as your housing payment and car loan. Next, estimate variable expenses — utilities, gas, groceries, gifts and other costs that change from month to month.
As you track your actual spending, note whether you’re short on cash or have discretionary funds available. Over several months, patterns will emerge, making it easier to identify where you can adjust or improve your spending habits.
Ask yourself these questions:
• Are you using credit cards each month because you’re short on cash? If so, consider why and when you rely on credit. Then create a plan to limit usage and pay off outstanding balances.
• How much will you need to have saved to live a comfortable life in retirement? Understanding long-term needs helps guide short-term spending decisions.
• Review your spending and saving each month, and adjust your budget accordingly. The goal is to reinforce good habits, reduce unproductive ones and steadily move toward your financial goals.
Annually review financial goals
After establishing your budget, prioritize both your short- and long-term goals. Determine whether you have discretionary funds available to support your goals for the year.
Are these goals realistic given your budget and long-term objectives? If not, consider what adjustments you can make to ensure they are attainable.
Revisit your budget and revise your goals so they remain achievable without relying on additional credit card debt. Reviewing your goals annually helps keep your financial plan aligned with your current circumstances and sets you up for steady progress year after year.
Automate your savings
Pay yourself first by automating your monthly contributions to both your retirement plan and your savings account. When you never see the funds in your checking account, you are far less likely to miss them as part of your monthly cash flow.
Automating your investing also allows you to take advantage of dollar-cost averaging, contributing a fixed amount at regular intervals regardless of market conditions. This approach can be especially helpful because it removes emotion from investing. When stock prices fall, your contribution buys more shares; when prices rise, it buys fewer.
By investing consistently, you avoid the temptation to time the market, reduce the likelihood of trading at volatile moments and limit the impact of emotional decision-making.
The purpose of saving is to allow your money to grow over time through the interest it earns. As your balance increases, the interest itself begins to earn interest. This is called compound interest.
Compound interest is the interest earned on both the principal and the accumulated interest. For example, if you save $100 per month for 20 years at 5% interest, your total contribution would be $24,000. At the end of the period, however, you would have $41,374.63. Of this amount, $17,374.63 represents the compound interest generated in addition to your original investment.
Live below your means
As you practice managing your budget, work on shifting your mindset toward living below your means. When you review your spending, identify areas in which you can cut back. This may be eating out less, canceling unused subscriptions or avoiding impulse purchases made out of boredom.
Adopt a more intentional approach to spending by asking yourself, Do I really need this? If possible, delay the purchase for 24 hours and revisit the question. Often, your perspective will change, and the sense of urgency will fade. As you reshape your mindset around money, use the time and energy you once devoted to shopping to seek out inexpensive experiences that bring real satisfaction and happiness.
You don’t need to wait for New Year’s resolutions to improve your financial habits. Now is the ideal time to review your finances and make them a priority. Changes such as new tax laws, higher maximum retirement contribution limits or lower required minimum distributions can all influence your financial picture in 2026.
Take charge of your future today by implementing strategies that build lasting financial habits — habits that support a stronger, more successful financial future.
Teri Parker is a certified financial planner and vice president for the Riverside office of Captrust Financial Advisors. She has practiced financial planning and investment management since 2000. Contact her via email at Teri.parker@captrust.com.