How to get ahead of New Year's savings resolutions

Every New Year, millions of Americans resolve to become financially disciplined. In 2024, 67% aimed to make financial resolutions, but more than 80% said high interest rates and inflation could cause their resolutions to fall by the wayside.¹

Making New Year's savings resolutions can be about more than building better financial habits — they can also be about creating a plan that supports long-term success. Whether saving for a rainy-day fund or setting aside money for future travel, having clear, actionable savings goals is essential for achieving good financial health in the new year.

Assess your current financial situation and set realistic savings goals

Before jumping into New Year's savings resolutions, it may help to conduct a full financial assessment. This starts by reviewing current income, expenses, debts, and existing savings. This check-up can provide a clear financial picture and help identify areas for savings.

After assessing the current financial situation, the next step is setting a realistic money management plan. It's a good idea to focus on specific, measurable objectives rather than vague or overwhelming goals. One of the best ways to ensure targets are achievable is to use the SMART strategy: setting goals that are Specific, Measurable, Achievable, Relevant, and Time-Bound.²

It’s also important to align savings goals with overall financial priorities. Whether saving for an emergency fund, a down payment, or a vacation, it helps to set goals that fit into a long-term financial plan. Here’s more on the SMART strategy.

How to set SMART financial goals

Setting financial goals using the SMART framework can help create realistic and attainable targets. See below for an example of how to create a meaningful budgeting plan:

• Specific. Start by defining a precise savings goal. For example, "I need to save $3,000 for a vacation next winter."
• Measurable. Break the larger goal into smaller, more manageable steps. For instance, "I will save $250 per month for the next 12 months."
• Achievable. Make sure that the goal is realistic and within budget, such as, "I reviewed my budget and can cut down on ordering takeout to help save $250 per month."
• Relevant. Make sure this goal aligns with broader financial priorities. For instance, saving for a vacation may fit perfectly within a long-term financial plan if travel is a priority.
• Time-Bound. Set a clear deadline to stay accountable. For example, "I will save $3,000 by next November for my winter vacation."

New year, new budget

Creating a budget for the new year can be a great way to gain insight into where money is going. Monitoring spending can help identify areas to cut back and reallocate funds. Whether it’s canceling an unused subscription service or cutting back on dining out, small adjustments can add up to make a big difference.

One key step in managing finances is categorizing expenses — such as housing, food, transportation, and entertainment — and designating a portion of income for each. It’s also important to consistently allocate income to savings, whether for an emergency fund, a rainy day, or future goals.

Check out PayPal’s guide on how to budget and save money.

Automate savings

Automating savings is one way to stay on track with new-year savings goals. Setting up automatic transfers to a savings account ensures that money is regularly being put aside, without needing to think about it.

PayPal makes it easy to send automatic transfers to linked savings accounts. In addition, PayPal Savings³ offers high-yield savings accounts that can help money grow faster over time.

Take advantage of shopping rewards and cash back

Another way to boost savings in the new year is by maximizing PayPal’s cash back offers and rewards programs.* By using these features, shoppers can earn money back on everyday purchases, helping to reduce overall spending. Whether shopping for essentials or splurging on something special, using rewards can stretch a budget further.

PayPal partners with a variety of merchants that offer discounts and special deals. Explore PayPal Rewards for a full range of cash back opportunities and other ways to save.

Build a rainy day or emergency fund

An emergency savings fund is one of the most important components of financial security. Experts often recommend having three to six months’ worth of living expenses set aside in an emergency fund to cover potential setbacks.

With PayPal’s savings options, it’s easy to set up a dedicated emergency fund that’s both convenient and accessible. You can even automate transfers so that contributions to a savings account are made regularly.

Track savings progress

Keeping an eye on how much has been saved is one way to know if budget adjustments are needed to reach financial goals. This ongoing review process can help keep the momentum going.

Learn more about how to manage your money with PayPal.