Between record-breaking  inflation, the housing market, and murmurs of a looming recession, the last few years have felt like financial whiplash. Combined with the reality that most of us weren’t taught how to manage money, it can be overwhelming. How do we save wisely? How can we give generously when we’re worried about our own situations?  Is it possible to not worry about money?

The New Year is a great time to evaluate our relationship with money and learn how to spend it mindfully. Financial resolutions might not seem as pressing or exciting as exercise, health, or career goals – but money touches every aspect of our lives. The positive ripple effects of creating a solid financial foundation can be felt in every other area, now and for decades to come.

We can start by taking an honest look at our finances and developing new habits that will bring us closer to our goals.

If you want to improve your relationship with money, here are three habits to cultivate.

Spending: Prioritize What Matters to You

When it comes to spending money mindfully in a way that’s aligned with our values, there is no more practical skill than budgeting. Let’s acknowledge that budgeting can get a bad rap. It’s been portrayed in our culture like the ultimate fun-killer.

But what if I told you that budgeting is the key to unlocking financial peace? That budgeting protects the fulfilling life we hope for instead of restricting it?

Budgeting gives your money a specific role to play. It’s permission to spend money according to your goals, dreams, and values. It provides peace of mind by raising awareness of what your money is up to. It also offers freedom to prioritize what matters most to you and to make sure your finances support that (instead of going on another spontaneous Target shopping spree).

Want some help with making a budget? Check out the software YNAB (aka You Need a Budget).

Saving: Be Ready for Whatever Comes Your Way

Saving dovetails perfectly with budgeting. Your well-rounded budget should include categories for regular expenses like groceries, gas, clothing, and rent or a mortgage, but it’s also important to have savings. Here are some common categories to consider: emergency savings, piggy banks, and long-term goals.

We should have money set aside for emergencies. When you’re just starting out, save one month’s worth of expenses. Then, once you’ve paid off all of your non-mortgage debt, grow your emergency savings to 4 – 6 months’ worth of expenses.

Piggy banks are savings categories that you contribute to each month, but don’t spend from regularly. They help you save smaller amounts on an ongoing basis so that when a larger bill or expense comes, you have the money available and aren’t left scrimping or scrambling to pay it. Piggy banks are great for things like Christmas gifts, car insurance premiums, home maintenance expenses, vehicle registration, children’s activity or education fees, property taxes, etc.

Finally, we should save for our long-term priorities such as down payments, purchasing another vehicle, vacations, retirement, home renovation projects, etc. These are similar to Piggy Banks in the sense that you save monthly and the category grows with time, but long-term savings typically take a year or more to grow.

Giving: Be Generous to Those Who Need It Most

Cultivating a healthy relationship with money can help us live generously and help those who need it most. As Catholics, we’re invited to sacrifice for others out of love for them. Think about the people and the causes that you care about most, and support organizations that support them. Giving is a way to both live according to our values and spend our money mindfully.

Giving should be the first category you prioritize in your monthly budget. A good starting point is 10% of your income, as it’s a noticeable amount for most people. If giving 10% means you can’t eat, then it’s appropriate to give less. On the flip side, if 10% is a drop in the bucket for you, it’s appropriate to give more.

Budgeting, saving, and giving – these financial habits will help you improve your relationship with money and spend it well. With this foundation, not only will you have more financial peace, but it will enable you to say “yes” to whatever you are called to do. When we’re not worried about money, it’s a lot easier to answer the calling that God has for us. And it’s also easier to withstand uncertain and volatile economic conditions with peace – something we all need in these uncertain times.