What are Canadians’ top financial resolutions for 2023?

(1) Use the 24-Hour Rule

Did you find something you really want or like? Don’t buy it! Instead, practice the 24-Hour Rule (or the more extreme version, the 30-Day Rule). This rule requires you to wait 24 hours (or 30 days) before spending your hard-earned money on that must-have item. What does this do? First, it eliminates impulse shopping — a knee-jerk reaction that can really eat into your savings. Next, it forces you to examine whether that new, ‘must-have’ item will bring you more joy than achieving your bigger, more long-term goals, such as saving up for an education, a car, buying a home or retiring comfortably.

(2) Go on a diet

The quest to get healthier in the New Year can seriously squeeze your budget and hamper efforts to save money.  But getting healthier doesn’t have to be costly. Another way to save money, while sticking to a healthier diet, is to cut down on your meat and animal product intake. Meat and dairy products are some of the most expensive items in grocery stores. On average, Canadians spend almost $1,500 each year on meat. Skip the meat aisle and save more than $120 per month.

(3) Borrow more

How many of us have bought a tool, a book or an item that gets used maybe once or twice each year? This lack of use is a signal that we may not need everything we buy. This excess leads to clutter and higher expenses. To reduce costs and save space and money, consider where and when you can borrow. Check out tool rentals; make a point of going to the library; join share and swap trade groups and ask friends if they’re open to sharing and swapping. The best part is that borrowing not only saves you money but opens opportunities for community involvement.

(4) Sleep better by lowering your thermostat

Want to sleep better and save money? Turn down your thermostat. According to the Sleep Foundation, turning your thermostat down to 18.3ºC not only gives you a better night’s sleep but you could save between $60 and $220 off your heating costs, each year.

Resolution #2: Pay off debt

(1)  Make a plan to pay down debt

Since debt can be expensive (and can hinder almost every other goal or New Year resolution), it’s critical to assess your debt and make a plan for how you will pay it down. Start by listing all debts you owe and the interest rate charged on each loan. Then make a plan on how to pay these debts back.

One popular method is the Debt Snowball, where you make only minimum payments to all your debts, but pay as much as you can on the debt with the lowest balance. Once that debt is paid off, you tackle the next debt with the lowest balance, and so on.

Another tactic is the Debt Avalanche, where you maximize the payments on the debt with the highest interest and once that is paid off start paying off the next high-interest loan.

The good news is there is no right or wrong way to pay down debt, so pick a plan that works for you and stick to it.

(2) Consolidate to lower costs and get debt-free sooner

For Canadians struggling to make payments on multiple loans or for anyone with high-interest debt, consider getting a consolidation loan. The loan amount will equal the total amount you owe, but the interest rate charged is lower, so more of your payment goes towards paying down the debt.

For example, if you owed $1,500 on a credit card that charged 21% (with a monthly payment of $140), plus $6,000 on a credit card that charged 22% (with a monthly payment of $560), you should look for a debt consolidation loan of $7,500. Get the loan with an interest rate of 8%, but keep your monthly payments the same at $700, and you could pay off your entire debt in less than a year, and save almost $600 in interest payments. To use the Finder comparison to find the best debt consolidation loan for your needs.

Another option is to consider transferring your credit card balance to a new card with a lower interest rate or even a 0% promotional rate. Just be careful, as the key to this strategy is to use the savings from consolidating debt to repay the loan, not take on more debt.

(3) Review your credit report

When tackling debt, be sure your hard work is rewarded with an increase in your credit score. While many factors go into calculating your credit score, how much debt you carry and how responsible you are at paying it off are two critical components. To motivate yourself — and confirm your hard work is being recorded — be sure to check your credit report. Confirm that paid-off loans are no longer on your record and that regular, on-time payments are accurately reported.

Resolution #3: Stick to a budget

(1) Track your finances + create a budget

The easiest way to develop a plan for making a big purchase is to track your finances and create a budget. It sounds boring, but by taking these steps you get a clear picture of what you earn and how you spend your money. It also helps you identify areas where you can save — putting those savings towards that big purchase.

(2) Set up a dedicated savings account

Separating your savings into a different account accomplishes three goals. First, it makes it harder for you to spend that money (most dedicated savings accounts charge a fee for withdrawals or don’t come with debit cards). Second, it clearly shows how much money you’ve set aside towards your goal — and this helps motivate you towards completing the goal. Finally, it allows you to earn more on these savings. By choosing a high-interest savings account, you can earn two or three times more than money saved in a regular day-to-day account.

(3) Pay yourself, first

Want to make saving a habit? Set up automatic deposits into your dedicated savings account. By making your savings deposits automatic, you remove the temptation to spend this money and solidify the habit of paying yourself first. This habit is critical as it’s the foundation of all savings goals, whether you’re buying a new computer, a car, a home or saving for retirement.