How to set financial goals for 2023

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Financial goals are almost always part of setting New Year’s resolutions, and like many New Year’s resolutions, they’re forgotten by mid-February. But succeeding financially in 2023 is as simple as focusing on the right things, and then making regular, ideally weekly, progress toward them. Here are some simple ways to ensure financial success in the new year and beyond.

Focus on increasing your income

The key to achieving any financial goal is having the money to do so, which is why focusing on increasing your income in the New Year is the best place to begin. Before you move on to setting savings goals or debt-repayment goals, consider planning to do any of the following in 2023 first:

• Negotiate a raise at your annual review
• Get a higher-paying job with a new employer
• Get additional education or certifications
• Start a side hustle
• Start a business

There is not one person’s finances that can’t be improved by simply adding more income, so make it a priority no matter what your other goals are. Even if you won’t realize the increase in earnings for months, doing the work early in the year is still one of the best places to focus your energy to improve your finances in 2023.

Tackle big goals one at a time

Most financial advice suggests taking all your goals for the year and breaking them down into monthly payments or contributions, but I’ve personally found it easier to prioritize one financial goal at a time.

For example, say you have $1,000 a month of cash to allocate between a registered retirement savings plan, tax-free savings account, your child’s registered education savings plan, and paying off your credit card. You might be tempted to split it equally and pay $250 a month toward each goal. The only problem with this is it leaves you in debt for the entire year, and you’ll likely feel like you’re making very little progress on your savings month to month.

A better approach would be to allocate $1,000 a month to your credit card and pay it off in the first three months of the year. After that, you might focus on your child’s RESP and put $1,000 a month in for the next two and a half months to contribute the $2,500 you need to earn the maximum annual Canada Education Savings Grant. At this point you’ll only be halfway through the year, have completed two of your financial goals, and can now focus entirely on your TFSA and RRSP, maybe allocating $500 a month to each. By the end of the year you still allocated the same amount of money as if you contributed to each goal monthly, but by focusing on one at a time, you experienced quick wins. Being able to mark goals as complete every few months gives you motivation and momentum for tackling the next, which can make it easier to achieve all of them.

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Make your contributions on a biweekly or weekly schedule

While focusing on financial goals one at a time, you might consider contributing to them monthly, but a biweekly or even weekly schedule might make more sense. This is especially true if you’re paid on a biweekly or twice-monthly schedule, where it will make the most sense to line up your savings contributions or debt payments with your payday.

I personally always found it challenging to contribute $500 a month to my TFSA, but $125 a week never strained my budget. The smaller amount was simply easier to absorb week-to-week, even though the end result was the same as contributing monthly.

Smaller, more frequent amounts are also ideal for debt repayment. Because interest on a balance owing is typically calculated daily, making more frequent payments will reduce the amount of interest you pay over the lifetime of the loan and can even get you out of debt sooner. It is also incredibly satisfying to watch the balance decrease each week instead of once a month!

Remember, every dollar counts

Inevitably there will be financial challenges in the year ahead: unexpected expenses, occasions where you overspend and possibly disruptions to your income. It’s important that you do not stop making progress even when you encounter setbacks.

If, at some point, it becomes clear that you will not be able to achieve the financial goals you set this year, you need to remind yourself that financial security is not an all-or-nothing game. Many people give up on a task if they can’t hit the target they set for themselves, but with your finances, every dollar counts.

Even if you can’t max out your TFSA, it’s better to contribute $2,000 than $0. If you can’t pay off a $5,000 debt in a single year, it’s still better to pay off $3,000 this year and $2,000 the next. You’re not a failure if you don’t achieve every goal you set for yourself. The only way to fail is to quit.

The most important part of achieving any goal, financial or otherwise, is taking action toward it. It can feel satisfying by setting goals and drawing up a plan to achieve them, but at the end of the day implementation is the only way to achieve success. You now have a whole year to make your financial dreams come true, and the best way to do so is to start right now.

Bridget Casey, MBA (Finance) is founder of Money After Graduation, a financial e-learning company. You can follow her on Instagram at @bridgiecasey and Twitter at @BridgieCasey.

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