Forget resolutions: You need the ’23 money-saving cheat sheet

We’ve just passed the 12 days for which the ‘typical’ person keeps their New Year’s resolutions. And indeed, from my conversations, fewer people seem to have made them this year.

Perhaps that’s because the pandemic has eroded the notion that we control our outcomes (or maybe the Reserve Bank has), but the sudden cost impost of everything from our mortgages to our supermarket trips requires some sort of strategy heading into the new year.

The sudden cost impost of everything from our mortgages to our supermarket trips requires some sort of strategy heading into the new year.Credit:Dionne Gain

So, forget resolutions: I give you my C.H.E.A.T. sheet for 2023 to help you survive this year and thrive into the future.

C is for Cash.

A big part of why resolutions usually fail is because they are often negatively angled, such as eating or spending less. But those 20-times-a-day consumption decisions are key to both health and wealth.

Cash is a recipe for mindful spending at worst and moderated spending at best.

With this in mind, let me suggest the cash approach.

I tried this for several months last year, withdrawing the precise amount from my pay with which I had to ‘play’ and then buying everything with that physical money.

Where I had to transact online – say booking movie tickets – I bought them with gift cards, which I paid for in cash.

Yes, I had plenty of sanitiser on ‘hand’ but the exercise instantly saw even me – who was already, you know, a finance expert – economising.

It’s also fantastic to demonstrate real money’s scarcity to your virtually-minded kids. Cash is a recipe for mindful spending at worst and moderated spending at best.

(And before any robbers get excited, I am back to using mainly cards, with lasting budgeting benefits.)

H is for ‘Holy Shit’ fund.

Thanks to the (aforementioned) circumstances outside your control, you may be sailing close to the financial wind right now.

So I am not going to deliver my normal lecture about having a ‘Holy Shit’ fund of preferably six months’ salary in case ‘shit happens’.

But if you don’t have this buffer, squirrel away anything that you can for safety. If you have a mortgage, put it in an interest-bearing offset account alongside it.

We don’t fully dictate our financial destiny, but smart decisions sure maximise your money – and enjoyment.

And while we are thinking defensively, I am going to throw in the importance of insurance too because you need to protect before you look to prosper. There has never been a more crucial time for an insurance audit.

If you have dependents, you need life and income protection insurance, and you need the latter even if you are single – your salary is the only one.

Please also consider private health insurance. I credit it with saving my life almost exactly two years ago. 

E is for Expenses.

Your so-called fixed expenses? They are anything but. And that goes doubly for what is probably your biggest pain point: your mortgage repayments.

Fewer people seem to be making new year’s resolutions this year, but that doesn’t mean you shouldn’t have a plan.Credit:Janie Barrett

Start there to shave an average of $582 off the monthly cost of a $500,000 loan (assuming you pay a fairly standard big bank rate now of 6.5 per cent).

The 3 steps to save:

Don’t stop at your mortgage, though. Interrogate your every expense, from your utilities to your insurance.

Comparison websites help hugely but be sure to find and disable what I call the ‘bias button’ that prioritises their partners over your perfect product.

A is for Assets.

In these tighter times, it’s so easy to forget to stop and assess – another good ‘A’ word – your assets.

Specifically, your unencumbered assets. Working out what they are is no more complicated than figuring out the difference between what you own versus what you owe.

Grab a bit of paper and guestimate the value of your house (and any other properties), car/s (that’s possibly at least held value recently) and any shares and other investments.

Then minus your debts on said assets: that’s your net worth. File that figure away for next year; ideally, you want it to be getting larger each one.

This brings me to the final step in your C.H.E.A.T. sheet.

T is for Target.

Reality check: you shouldn’t seek money for money itself. What’s the point? Ultimately, you want it for the opportunities and, more crucially, options it brings.

The precious aim, to circle back to ‘A’ above, is a fully paid-off roof over your head by retirement and enough income to live on (how’s your super travelling?).

But along the way, life needs to also be satisfying. What are your so-sweet-you-can-almost-taste-them New Year goals? Dream a little.

No, we don’t fully dictate our financial destiny, but smart decisions sure maximise your money – and enjoyment.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me. Follow Nicole on Facebook, Twitter or Instagram.

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