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17 New Year’s Resolutions That Will Save You Money

The first three weeks every January, I watch as the gym overflows with resolutioners. By Feb. 1, the crowds drop back down to normal levels.

It makes sense. Everyone wants the results — whether better health, more wealth, or closer relationships — but they don’t always choose the best ways to obtain them, leading to failure (and a pricey gym membership they didn’t use).

We’ve all blown New Year’s resolutions. But as you reflect on your life over the last year and how you want to improve your personal finances over the next, focus on ideas that help you save money, build wealth faster, live healthier, and design your perfect life.

New Year’s Resolutions That Will Save (or Make) You Money

Try the following financial resolutions to boost your finances. Some even help you get healthier in the process, knocking off several birds with the same stone.

1. Pay Off All Unsecured Debts

When it comes to debt, prioritize paying off unsecured versus secured debt first.

Unlike secured debts such as home mortgages and auto loans, unsecured debts tend to charge high interest rates, as the lender holds no collateral. Worse, they often arise out of wants (such as consumer credit card spending) rather than needs (such as a roof over your head).

Resolve to become debt-free once and for all in the coming year. Try the debt snowball method to pick off your credit card debt and other unsecured debts one by one, pumping all your extra money into your smallest debt while making only the minimum payment on your other debts. With each debt you pay off, you have more money to put toward the next smallest debt until you no longer owe a single monthly payment for unsecured debts.

Beyond saving you money, it also helps improve your credit score. The next time you need a secured loan, such as a mortgage to buy your next home, your lower debt ratio and higher credit score could help you score a lower interest rate and down payment.

2. Hit Your Emergency Fund Target

There’s no one-size-fits-all emergency fund amount — not in dollars, and not even in months of expenses.

People with extremely stable incomes and expenses don’t need as much cash set aside in an emergency fund as those with irregular income or expenses. At times in my life when I had a stable, entirely reliable paycheck and low living expenses, I’ve felt secure with as little as one month’s living expenses in an emergency fund. During less predictable times, I’ve opted for six months’ living expenses in cash, in line with Dave Ramsey’s “Baby Steps” recommendation of three to six months’ expenses.

Most people keep their emergency fund in a bank account, such as a high-interest savings account from CIT Bank. But you can also get creative by building several layers of protection, including some money held in stable short-term investments and leaving a credit card or two completely untapped for emergency use.

Whatever your personal target for an emergency fund, resolve to meet it this year. With the security of an emergency fund, you can invest money with less fear.

3. Set a Target Retirement Date — & Make Tangible Progress

The perceived distance of retirement blurs our vision of it. That makes it easy to dismiss as a problem for another day.

But retirement is the one universal financial goal we all share. Not everyone wants to buy a home or help pay for their kids’ college, but we all need to plan for the day when we can no longer work (or are just ready to retire).

Take some time to set a target retirement date. Based on when you want to retire and what you want to spend in retirement, you can plan your own retirement strategy. Your retirement strategy informs how much you should put toward tax-sheltered retirements, such as a 401(k) or Roth IRA, which in turn helps you save money on taxes.

And you don’t need to wait until your 60s to retire. Anyone can reach financial independence and retire early if they don’t mind funneling more of their income into investments that generate passive income on their own.

4. Add a New Source of Passive Income

The more passive income you earn, the less dependent you are on your full-time job. When you can cover all your living expenses with passive income alone, you’ve reached financial independence, and working becomes optional.

Common sources of passive income include dividend-paying stocks and exchange-traded funds, bonds, rental properties, real estate investment trusts, crowdfunding platforms like Fundrise and Streitwise, or starting your own online business (or brick-and-mortar business, for that matter). You invest money once, and you get to collect income forever.

This year, aim to cover more of your living expenses with passive income from investments.

5. Start a Side Hustle

You can also add a new source of active income by starting a side hustle.

If the idea of working a second gig makes you feel exhausted just thinking about it, remember that it doesn’t need to be unpleasant or stressful. You can start a passion business on the side of your full-time job or do something easygoing and fun, like pouring wines at a local winery. Look for ways to make money from hobbies you already do for free.

Get creative and boost your income in the coming year.

6. Stop Smoking

According to, the average pack of cigarettes costs $6.65 as of January 2020. So a pack-a-day smoker spends an average of $2,427.25 per year on cigarettes alone.

That’s thousands of dollars per year on a product that shortens your life. Just imagine what you could do with that extra $2,427.25 each year. And that says nothing of the other financial benefits of quitting smoking, such as lower health insurance rates and health care spending generally.

7. Quit or Reduce Your Drinking

Another behavior that extends your life expectancy is abstaining from or moderating your drinking.

It costs money, and it damages your health. According to the Centers for Disease Control and Prevention, health risks include:

  • Heart disease, stroke, high blood pressure, and digestive problems
  • Cancer of the mouth, throat, esophagus, liver, breast, and colon
  • Liver disease
  • Learning and memory problems, including dementia and poor cognitive performance
  • Social issues, including family- and work-related (which can lead to unemployment)
  • A weakening of the immune system, increasing the odds of falling ill
  • Mental health problems, including depression and anxiety
  • Alcohol use disorders and dependence

A 2018 Harvard study found that moderate drinking of up to one drink per day for women and one to two drinks per day for men did not impact longevity, but higher drinking dramatically reduced it. Cut your drinking, or better yet, quit drinking entirely and save even more money.

8. Quit Drinking Sweetened Beverages

Sweetened beverages not only cost Americans an absurd amount of money each year, but they also contribute to America’s soaring diabetes rates.

A 2016 study by the United States Department of Agriculture (USDA) found that families not on food stamps spend an average of $2,238.80 per year on sweetened beverages, the fifth-highest grocery expense. Among food stamp recipients, sweetened beverages were the second-highest grocery expense.

And no, sweetened beverages don’t end at sodas. Your bottled or canned tea, coffee, or energy drinks also count.

Drink water instead. It’s virtually free and far healthier than sweetened beverages.

9. Learn How to Cook Your 15 Favorite Dishes

For a long time, I thought going out to eat meant better-tasting meals than I could prepare myself. And given my poor cooking skills, perhaps I was right.

But at a certain point, I started learning how to cook my favorite meals, and one day, I realized my homemade meals could rival anything I ordered at an overpriced restaurant.

Start getting comfortable in the kitchen with recipes easy enough for kids, such as dump-and-cook pressure cooker meals. The more comfortable you get, the better the meals you can make and the more you’ll enjoy cooking.

Gradually start building your own family recipe cookbook of favorite meals. Soon, you’ll wonder why you used to eat out so often, and by eating in more, you’ll save more money and eat healthier.

10. Pack a Lunch Every Day

Depending on whether you buy a fast-food lunch or sit down to eat, lunches cost anywhere from $7 to $20 or more. According to a USA Today report, Americans spent an average of $11 for lunches out in July and August of 2015.

If you ate every weekday lunch out, that would come to $55 per week, or $2,860 per year. Granted, most people don’t eat lunch out every day, but you can still expect to pay two to four times as much for a prepared meal as you pay for the raw ingredients to pack your lunch.

There’s also the health impact of preparing your meals. Restaurants don’t prioritize nutrition — they prioritize their profit margin and flavor.

Eating healthy doesn’t have to cost a fortune. Anyone can eat healthy on a budget by buying ingredients such as chicken breast and whole vegetables. It’s just less convenient and tempting than a grease-drenched Big Mac.

When you take some time while making your grocery shopping list to think about what you’re having for lunch, it becomes easy to eat healthy on a budget. For example, I cook a large enough portion for dinner that I have leftovers for lunch the next day, which removes any inconvenience from making my lunch.

11. Eliminate Food Waste

According to the USDA, between 30% and 40% of the food in the U.S. goes to waste each year. Much of it ends up in landfills, adding to the general waste problem and preventing our food waste from even reentering the nutrient cycle.

The best way to avoid food waste is not to lose track of what you have. Once per month, take stock of your freezer and (ideally) empty it by eating everything in it. Do the same with your pantry, making a game of it by taking on the “pantry challenge.”

Store your food with less air leakage as well. Use a vacuum-sealer whenever possible, and store other foods in airtight containers to prevent pests from getting into them.

12. Get Fit for Free

A 2018 study by Statistic Brain (reported by The Hustle) found that nearly two-thirds of gym members never bother showing up to the gym. Fully 82% of members go less than once per week.

People keep their unused gym memberships because they’d rather keep paying than “admit defeat” by canceling them. Don’t fall into that trap.

Instead, think of gym memberships as a privilege, not a right. Make yourself earn the right to spend money on a gym by first establishing a daily workout routine.

Start with easy home workouts to build the habit. Once you establish a routine, it requires almost no willpower to work out, but the first few months require initiative to actively create the habit. Fortunately, according to Mayo Clinic, greater health and fitness lead to greater energy levels.

If after six months of working out, you decide you’d like to expand your routines to include gym workouts, you’ve earned that privilege. But in the meantime, save yourself the money.

13. Become More Handy Around the House

Contractors are expensive — and that’s when they’re not scamming you outright.

If you own your own home, it’s nice to make improvements that reduce your homeownership costs. But here’s the kicker: Look for one you can potentially accomplish yourself, perhaps with the help of a friend or YouTube University. Some energy-efficiency improvements even come with tax credits, saving you even more money.

Like cooking, home improvement involves skills that build on one another. The hardest step is the first, but as you gain comfort and confidence using various tools, you begin to realize just how much you can accomplish on your own.

Start small, and gradually tackle larger projects as you build confidence. Not only can you lower your homeownership costs, but you can also boost your home equity, all without spending a dime on a contractor.

14. Cut the Cord

In the era of streaming entertainment, there’s no need to spend so much on cable TV.

It costs a pretty penny. A 2020 report by found that the average cable package ($217.42) now costs more than all other home utility costs combined.

That cost includes your landline phone service: another outdated dinosaur that deserves the chopping block.

Ditch your cable subscription in favor of a streaming service like Hulu, Netflix, or Disney+, or better yet, stop watching TV altogether.

15. Declutter (& Maybe Downsize)

On a simple level, decluttering your home helps you discover things you thought you’d lost or had simply forgotten you owned. Things you otherwise might have repurchased.

But beyond the obvious, decluttering also shifts your mindset around your personal belongings. When you start thinking about removing objects from your home, you stop thinking in terms of acquisition. You only buy what you absolutely need rather than buying things on a whim.

Take this mindset even further by downsizing your home to save money on your rent or mortgage, utilities, and maintenance and repairs.

Start operating from a place of getting rid of things instead of acquiring more of them. You’ll be surprised how directly less stuff translates to less stress.

16. Overhaul Your Budget

Most people go about budgeting all wrong.

They start with their current expenses and look for meek tweaks and easy places to shave a few dollars here or there. Instead, start from your goal and work backward.

Start by setting your target savings rate: the percentage of your income you save and invest. That leaves you with a certain amount of money you can spend — how you divvy that up depends on your priorities.

No expense is sacred. Put every line item under the microscope, starting with your most expensive bill, your housing payment. How can you reduce or even eliminate it? From downsizing to house hacking to moving to a state with lower taxes, get creative. Then do the same with every other expense in your monthly budget, such as your transportation and food costs.

To give you a sense of just how far outside the box you can go, my family and I live overseas in a country with a low cost of living, enjoy free housing, and live without a car. But you’ll never realize significant savings if you start with your existing expenses as assumptions.

Draw up an entirely new budget using Google Sheets or with a company like Tiller, and save far more money in the coming year.

17. Track 3 Numbers Every Month

As they say in business, that which gets measured gets done. If you want to make real progress, you need to track that progress — every single month.

I keep it simple and track just three numbers each month: my savings rate, FI ratio (or FIRE ratio), and investable net worth.

Your savings rate is the percentage of your income you put toward savings or investments. Short for financial independence, FI ratio is simply the percentage of your living expenses that you can cover with passive income from investments. For example, if you spend $4,000 per month and earn $1,000 in passive income, you have an FI ratio of 25%. When you reach 100%, working becomes optional, and you can retire (if you want to).

Finally, track your investable net worth: the sum of your assets and investments minus the sum of your debts and liabilities. I don’t recommend including equity in your primary residence because it exists only on paper until the day you sell it.

Of the three numbers, net worth is actually the least crucial because it includes so many external factors outside your control, such as stock market gyrations. Your savings rate more accurately gauges your behavior, and your FI ratio measures your real progress toward financial independence and retirement.

By watching these three numbers, it makes your finances more tangible, and you’ll find yourself more excited about building wealth and passive income.

Final Word

While all these resolutions can improve your finances, don’t try to tackle all of them at once. There’s a limit to what you can accomplish in a single year, so don’t set yourself up for failure.

Instead, pick one or two resolutions and commit to them if you want to see real results — unlike those resolutioners who stop going to the gym by the end of January. Start thinking holistically about what your perfect life looks like, and then start making gradual, step-by-step progress toward it.

You won’t get there overnight. But you can get there within a few years if you approach it methodically, starting with one or two straightforward but life-changing resolutions.

G. Brian Davis is a real estate investor, personal finance writer, and travel addict mildly obsessed with FIRE. He spends nine months of the year in Abu Dhabi, and splits the rest of the year between his hometown of Baltimore and traveling the world.