The start of a new year is a good opportunity to get a fresh start with your finances. However, resolutions alone won’t do you much good. Instead, you should aim to develop specific habits that can help support them. 

This guide outlines six practical habits that can help you take control of your finances and improve your position despite economic uncertainty. 

Diversify Your Income Streams 

Income plays a foundational role in your financial planning, directly impacting how much room you have to save after expenses. As a result, expanding your income is one of the most powerful steps you can take to improve your financial position. 

The widening gap between the growth rates of living costs and wages has made it increasingly difficult to survive on a single job. In today’s volatile job market and unpredictable economic conditions, it’s beneficial to have multiple income streams. 

Consider building in new pathways to make money, ideally ones that are disassociated with your primary income stream. That way, it decreases the risk that they’ll all be disrupted by the same incidents. 

Use a Budget to Track Spending 

A budget is a tool that can help you understand how money moves in and out of your household. Rather than acting as a restriction, it provides visibility into your spending patterns, recurring bills, and areas where costs tend to fluctuate. 

This is especially important during periods of economic uncertainty. When the financial factors that are out of your control get more stressful, it’s often beneficial to focus on managing your sphere of influence. 

That said, there is no single budgeting method that works for everyone. Instead of trying to force yourself into common models, consider designing a more personalized approach that reflects your unique personal finances. 

Proactively Manage Your Debt 

Debt is a reality for many households, especially for expenses like education and medical care. However, it’s important to work consistently toward debt elimination, freeing room in your budget to save and invest. 

Consider implementing a structured debt repayment strategy, such as the debt snowball or debt avalanche. These involve making minimum payments toward all your debts while aggressively paying off one in particular, either with the highest interest rate or lowest balance. 

If you can’t keep up with your existing debts, you can also look for various ways to reduce what you owe, but debt relief can have other significant financial and credit-related drawbacks. 

Optimize Your Housing Costs 

Housing is typically the largest recurring expense in a household budget. Because large costs like rent, property taxes, and homeowners insurance are relatively fixed, they can significantly limit your flexibility in other areas of spending or saving. 

It can be challenging and potentially disruptive to your lifestyle, but reducing your housing costs is a potentially lucrative opportunity. For example, you may be able to shave $500 off your monthly rent, while there’s much less room to cut in other areas.  

Build a Robust Emergency Fund 

Unexpected expenses are a common source of financial strain. Sudden car repairs, medical bills, or home maintenance issues can disrupt a household budget when you have no savings available to cover them. 

Building a robust emergency fund provides a safety net for when surprises arise. Keep these funds in an accessible account to help ensure you can handle immediate needs without falling into a cycle of debt. 

Typically, experts advise that you should have between three and six months of liquid savings for emergencies. 

Think Long-Term About Retirement Savings 

Retirement planning is easy to postpone, especially when more immediate expenses demand your attention. However, delaying contributions can result in a savings gap that becomes more difficult to close as you reach the later stages of your career. 

However, carving out even a relatively small amount to invest for retirement can create a significant nest egg later in life. For example, if you invested just $250 per month for 30 years at a 7% real return, you could end up with just over $300,000. 

Tax-advantaged accounts like employer-based 401(k) plans and individual retirement accounts can help accelerate your timelines by reducing tax drag. 

Choose Financial Priorities That Fit Your Situation 

Financial planning is rarely linear, as your income and priorities naturally evolve over time. The start of the year is a great opportunity to determine how things have changed over the last twelve months, refresh your goals, and build new habits. 

Note that you’ll often make more progress by aligning your plans with your unique financial circumstances rather than trying to follow a universal template. 

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