How to Start Your New Year With A Clean Financial Slate

A new year brings with it fresh possibilities, and an opportunity to rewrite your financial story from a place of intention. After the tumultuous couple of years we’ve all endured, there’s never been a better time for a clean slate — and your finances could probably use a once over, too. In this article, we take you through how to start your new year with a clean slate, and make the next 12 months your most confident and empowered yet.

Review the past year and set action points

The most important part of moving forward is looking back. Start by reviewing the last year from a financial perspective, working through what went well, what progress you made, and any relevant context to bring meaning to what happened. Then think about things that didn’t go so well, and the relevant context there — for example, did you lose hours at work, or did you have a period of time without a full-time income? All of that context is important for understanding what you have to work with. You might want to journal out your thoughts and feelings about money to release any baggage you’re carrying, or you might want to do a more strategic audit that focuses more on the numerical changes to your financial situation.

Face the here and now

Next, it’s time to look at where you’re at in real-time. What’s in your bank account (and your savings accounts), what’s coming in each month, what are your expenses, and do you have any debts to tackle, including Buy Now Pay Later accounts? Starting the year by getting clear on your financial reality is a great way to kick off a fresh start.

Plus, this is a great chance to audit your expenses. Note down the total amounts in each of your accounts so you know exactly how much liquidity you have available, and then start looking at cash flow. What are your monthly mandatory expenses? How does this compare to your income each month? Is there anywhere you can trim some fat? Perhaps there are subscriptions you don’t need anymore, or a cheaper phone plan you could switch to. Cutting out any money leaks at the start of a new year is a great way to kick off on a high.

Map out your new year goals

… and most importantly, how you’ll achieve them. Now you know exactly where you are and where you’ve come from, we can look at where we’re going next. Start mapping out what you’d like to achieve this year, and how that will make you feel. Connecting your feelings to your goals gives them a greater chance of success, because you’ve got skin in the game.

Once you know what you want to achieve, reverse engineer those goals and break them down into bite-size chunks to ensure it’s a realistic milestone. For example, if you’ve decided you’d like to save up 3 months’ worth of expenses so you can go all-in on your side hustle one day, we need to look at exactly how we’re going to get there.

Say those 3 months of expenses are $9,000. How will you achieve that? Take the numbers of each of your goals, and break them down into different scenarios, e.g. 3, 6, 9, 12 or 18 months.

• To save $9,000 in 3 months = $3,000 per month
• To save $9,000 in 6 months = $1,500 per month
• To save $9,000 in 9 months = $1,000 per month
• To save $9,000 in 12 months = $750 per month
• To save $9,000 in 18 months = $500 per month

By seeing how much effort is required to achieve your goal in different time frames, you can select the one that best reflects your financial capacity and your motivation to achieve that goal. Doing so ensures you’re setting realistic goals and not setting yourself up to fail — plus, you can see the impact of more aggressive savings efforts, to assess whether it’s worth smashing down faster, or whether you’re happy to take the slower, steadier approach.

Set up a new budget in line with those goals

Once you’ve selected your goal achievement scenario, it’s time to set up a new budget based on those numbers. We need to factor in that regular amount to keep us on track! You can set up a new budget in your PocketSmith dashboard, and easily see in one view exactly how you’ll organize your money to make room for those goals.

Prepare a regular progress check-in

Keeping yourself accountable is one of the best ways to stay on track with your new year’s resolutions. Diarize a regular check-in each month or each quarter, and plan out how you’ll track your progress. Whether you’re monitoring your journey to a savings goal or tightening up your spending habits, look for ways you can check in with yourself and reflect on what’s working and what’s not. Remember to lean into how you feel on your journey to your goals — the better you feel, the easier it’ll be to keep going. If you’re finding things difficult, look for ways to make tweaks that’ll help you go the distance.

For example, if things feel tight or you’re finding it hard to stick to your savings habits, you can always drop the regular amount down to one of the scenarios you worked out earlier, and extend the achievement time frame accordingly. You’ll still hit the goal eventually, but it’ll just be a more relaxed path to get there.

Set the scene for success

When embarking on a new year and the goals that come with it, it’s important to set yourself up for success. To really ensure that clean slate is squeaky clean, do an audit of your environment — literally and figuratively — to ensure you’re set up for success. For example, do you have the right accounts set up to reign in your spending in the way you need to? Could you benefit from closing down that Buy Now Pay Later account? Do you need to mute some social media accounts or unsubscribe from marketing emails to keep your mindless spending at bay?

Keep your eyes peeled for anything that could cause a slip-up, because spotting them ahead of time is the best way to minimize impact and soar towards your new year goals.

If you’re looking to power up your new year’s finance resolutions, PocketSmith is your ultimate personal finance companion. Link your bank feeds, set budgets and review transactions all in one place.

Emma Edwards is a finance copywriter and blogger, on a mission to humanize the financial services industry by creating meaningful content that’s accessible and empowering. You’ll find her penning money tips at her blog, The Broke Generation, sharing financial insights on Instagram, or injecting life into content for her business clients.