Cheers to Financial Success in 2023
The start of a new year brings fresh opportunities to set new goals. Being more organized, working out, traveling more, and of course, better managing your finances are some of the most popular New Year’s resolutions. While you organize everything from your closets to your schedule, we’re here to help you succeed in your financial goals. Here are a few ways to make this a successful year for you and your finances.
Reflect on 2022
The best way to get to where you want to be is to review where you’ve been. The start of a new year is a great time to make an honest assessment of last year's finances and address what went well and what didn’t. Were you able to stick to a budget? Did you save what you planned from each paycheck? A simple financial review will help you recognize where you succeeded, appreciate all you accomplished, and identify your goals for this coming year.
Reviewing your finances also clarifies the areas in which adjustments need to be made. If there were places you fell short, develop a plan you can commit to so you can avoid doing the same in the new year. Overspending is a common oversight but combing through your expenses will help you identify the categories you may not have realized you spent so much money on. This practice also provides the opportunity to focus on where you want your money to go. Taking time to identify trends in your spending can help you create different strategies for the year ahead.
Save for a Rainy Day
Do you have an emergency fund? If you don’t, begin the new year by building a rainy day or emergency savings fund. Again, you never know when things can happen, so it’s better to have something than nothing. We typically advise to keep $1,000 in your emergency fund at all times, but ideally, you want to work towards having six months of living expenses in some type of liquid account. We know this isn’t easy to get to, but even starting with $5 from each paycheck will help build that fund. Then, when you have anything from car trouble to a medical emergency, it won’t be as costly to your budget.
Face Your Debt
Once you’ve established an emergency fund, it’s time to take note of your debts. Whether it’s credit card debt, student loans, or a mortgage – your debt won’t get any smaller by ignoring it. Look for ways to pay it off faster. Try cutting cable and streaming services or restricting your nights out on the town and stopping your daily Starbucks runs. These small, everyday purchases add up quickly.
Small changes to your lifestyle, and the money you save by making these tweaks, can make a huge difference in how fast you’re paying back debt, and the amount of interest you will pay over the life of your loans. If you can challenge yourself to shake up your routine now and cut back where you can, you’ll be thanking yourself in a year’s time.
Consider Life Events in 2023
Life brings unexpected expenses we can’t always plan for, but you should prepare for those things you know are coming. Birthdays, holidays, and vacations may be happening in your future, so consider those extra expenses now. Do you also have goals for this year? Maybe you’d like to purchase a car, or even a house? Are you planning to add a child to your family? These expenses might not have a firm date or timeline, but if you know you want to make some big purchases in the near future, recognizing the goal amounts and tucking away that extra money should also be a part of your 2023 plan.
Depending on where you are on your financial journey, this also might be a good time to shift from budgeting to more specific financial planning such as college saving or retirement planning. Our Wealth Advisors can help you identify when you are ready for that transition and create a plan to accomplish your future financial objectives.