4 Financial Habits for the New Year

“The human heart plans the way, but the Lord directs the steps.” Proverbs 16:9 (NABRE)

Ever notice we only start diets, on Mondays? Researchers have dubbed this tendency the fresh start effect. The fresh start effect refers to our inclination to wait to take action towards our goals until a key date…like New Years. With New Year’s right around the corner, it may be time to leverage the fresh start effect and give thought to taking on some new money habits. 

In Ephesians 4:22-24 we read: “That you should put away the old self of your former way of life, corrupted through deceitful desires, and be renewed in the spirit of your minds, and put on the new self, created in God’s way in righteousness and holiness of truth.” Many times, our “old self” describes the way we are trapped by old habits and behaviors that aren’t working for us anymore. Maybe you’re stuck in a cycle of consumerism. Or maybe anxiety is preventing you from taking the steps to understand your financial truth. 

The best first step when getting your money in order is to understand that God plays a role in your finances and one day you will be accountable to him for how you handled what he has given you. He is the Master and Provider. We are the stewards. So, while many resolutions come and go, if you truly make a resolution that is God-centered and wrapped in prayer, it is much easier to maintain the strength to keep that resolution. 

With that being said, here are some financial habits you probably want to consider in 2022. 

1. Track Your Expenses 

We probably sound like broken records here but tracking your expenses is essential. It’s one of the key factors in making your spending plan work for you. There are several options available to track your expenses. One of the easiest is simply writing your expenses in a notebook. You may also investigate budgeting software that works with an app to track expenses on your phone. It will allow you to keep up while on the go. A few of these include Goodbudget, YNAB and Mint. Compass Catholic offers a free Excel spreadsheet for you to download if that’s more your style.

2. Create a Debt Payment Plan

Imagine waking up on January 1^st, 2023, with zero credit card debt. What would that feel like? What kinds of things could you do that you can’t do today because to your debt load?  

You may have gotten into credit card debt by accident, but you can’t get out of it by accident. Create an intentional plan to get your debt paid off. If you’re not sure what debt to tackle first, go use our Debt Snowball Elimination Calendar to help you prioritize.  

3. Prepare for Emergencies

Being proactive is a quality of highly successful people, especially when it comes to handling money. We know emergencies are going to happen and they are rarely cheap. A solid emergency fund is the cushion between you and financial distress. If you don’t have anything set aside for emergencies, stop any additional debt payments (besides your minimums) and investment contributions until you have at least $1000 in an emergency fund. After that, follow the Compass Catholic Money Map to strategize growing your emergency fund to 3-6 months’ income.

4. Begin Giving

Generosity is a large part of financial discipleship. It’s a spiritual gift that benefits the giver more than the receiver. By being generous, you move away from a scarcity mindset to one of abundance. Like paying off debt, our generosity should be planned and somewhat strategic. We are all called to be generous, no matter our financial situation. If your finances are tight, you may want to get creative about your generosity. Consider donating your time and talent, donate your credit card points or miles to a charity of your choosing, or use Amazon Smile when making purchases. 

You may realize, after tracking your expenses, that there is room in your budget to increase your generosity. If so, you can download Compass Catholic’s Generosity Grid to help you better understand how to use your donations to have a global impact.

What do you want your financial situation to look like at this time next year? Your finances can be worse than they are now, the same, or better. While there might be some factors that are out of your control, the choice to have a better financial future is in your hands. The first step is usually the hardest step to take, but the reward of financial freedom will be well worth it.

If you’d like to learn more about managing your money from a Catholic perspective, consider participating in our Faith & Money Matters Bible Study. To find out what steps to take next on your financial journey, check out the Compass Catholic Money Map.