New year’s resolutions different in 2023 as inflation hurts households

Households have been hit hard by soaring inflation during 2022, and it is changing their goals for 2023.

Losing weight and cutting back on booze and smoking are popular new year’s resolutions, but in 2023 they will get a run for their money from another big goal.

Cutting the cost of living has shot towards the top of Australians’ new year’s resolutions, with 35 per cent trying to trim costs – almost level with the 36 per cent seeking a healthier lifestyle, new research from iSelect has found.

It comes as finance specialists suggest people put their goals in writing to give them extra impact in 2023.

The iSelect research found cutting back on luxury purchases would be the most popular way to reduce living costs, followed by lowering energy use.

“Diet and exercise-related goals may have dominated the lists of many Aussies in years gone by, but with price hikes across the board in 2022, it’s no surprise that ‘reduce my cost-of-living’ is a top resolution among Aussies for 2023,” says iSelect spokeswoman Sophie Ryan.

She says energy prices differ between energy retailers and plans, and “even a small price difference could make a big difference to your energy bill”.

AVOID LOYALTY TAXES

“Customers who stay with the same provider could also end up paying a ‘lazy tax’ or ‘loyalty tax’ because they don’t take the time to compare their options. For example, many customers aren’t aware that most energy plans – particularly those featuring discounts – generally expire after a year or two.”

Consumers could also review their private health and home and contents insurance, Ryan says.

Silvana Di Sisto has been on a cost-cutting “deep dive”. Picture: Supplied

One customer who is comparing and saving money is Silvana Di Sisto, who has already changed health insurers and energy providers and is now focusing on her three biggest cost culprits – housing, food and transport.

“My rule is that I only ever grocery shop once a week and I strictly use a list,” Di Sisto says.

“At the beginning of my deep dive into cost cutting, I tracked my expenses for two months to see where my money was going,” she says.

While cost-cutting is planned for 2023, Di Sisto says it’s not about going without, but putting yourself in a position to use money as a tool to live well.

“You can still live life in a valuable way and cut costs at the same time. In my view, it is about spending your money more mindfully and consciously on what is important to you and your family.”

Di Sisto says writing down resolutions gives them more energy.

DEFINE GOALS

William Buck wealth advisory director Adrian Frinsdorf says the holiday period usually provides the luxury of time to think and talk with family members about your wealth position and plans.

“Having clearly defined financial goals provides direction and motivation to improve your wealth position and prepare for major life milestones such as retirement,” he says.

“Without goals and a strategy on how to achieve them, you risk either treading water or going backwards.”

Frinsdorf says he expects many households to be belt-tightening in 2023.

“By categorising your spending between needs and wants, you can determine where to trim some costs without significant lifestyle impact,” he says.

“Just like a personal trainer or gym buddy can help keep you on track with your fitness goals, it’s important to have support in your financial corner. Being accountable to a family member or a financial adviser will assist you in maintaining discipline.”

iSelect spokeswoman Sophie Ryan says big energy savings are available. Picture: Supplied

Separate research by social investing network eToro has found that 62 per cent of Aussies plan to make a new year’s resolution, and half will include a money-related goal.

It tracked resolutions during 2022 and found that money-related goals were more likely to be met than fitness, wellbeing or other resolutions.

“The cost of living crisis has dominated the headlines in Australia this year and it’s clearly making people think carefully about how they’ll get by next year,” says eToro Australia managing director Robert Francis.

Putting goals in writing can help you clarify and define them, says iSelect’s Ryan.

“Doing so with pen and paper is fine, but you could also use software like Microsoft Excel and Google Sheets, budget planning phone apps or using the Australian Government’s Moneysmart budget planner,” she says.

HOW WE’LL CUT COSTS

• Reduce luxury purchases.

• Stick to budget.

• Seek better deals on bills.

• Reduce energy consumption.

Source: iSelect