As another year comes to an end and a new one begins, it’s time to start thinking about what New Year’s resolutions you want to set for 2023. Apart from regular favourites, we encourage you to focus on more travel, fitness, etc. Also about financial resolutions. New Year’s financial resolutions vary depending on your financial situation and future goals, and can range from getting your finances in order, to saving more for retirement, to improving your credit score, to building an emergency fund, to getting out of debt. It can be anything from repaying loans to creating a real estate plan. , more.
Resolutions must be carefully chosen and backed by consistent effort. Doing so will help you build discipline and stay focused on achieving your goals. Consider Talking to a Professional Financial Advisor Who can assess your current financial situation, investment portfolio, and retirement plans and guide you if you need to make any changes for 2023.
In this article, we’ll cover six New Year’s financial resolutions you can consider adopting to build a safer, more secure financial strategy for 2023.
1. Make a budget and stick to it
This is the foundation of financial planning. A healthy and well-designed budget is the foundation of a financially stable life and helps you stay disciplined and avoid making the wrong decisions. In addition to avoiding overspending, setting a good budget can help you grow your savings over time. Get rid of unnecessary spending that adds no value to your life, like magazines you never read or use, or app subscriptions. You can also cut down on unnecessary spending. For example, take public transport instead of taxis, cook meals at home, or cancel your OTT subscription. Doing so will not only help you cut your spending, but it will also help you save more money. Once you have a clear picture of how much you’re spending on discretionary and non-discretionary spending, you can set monthly savings goals. This can be 15-20% of your monthly salary. Setting realistic goals will help build a vital retirement corpus over time. Additionally, when you get your monthly paycheck, set a savings goal first and spend the rest. That way you can avoid wasting money.
Creating a budget at the beginning of the new year will help you determine your current net worth and compare it to the previous year. You can estimate your current net worth by considering assets such as cash, real estate, cash, investments, and gold, and liabilities such as mortgages, credit card debt, and loans. Find out if your current net worth is higher than last year and calculate the percentage increase or decrease. This exercise will give you an idea of your own growth and progress. See if your growth is on schedule and on target. If not, create a New Year’s savings plan to increase your savings and investments. You can do this by cutting your spending, creating new sources of income, and paying attention to money in general.
2. Get out of debt
Debt can keep you from meeting your financial goals as money that could have been used to build your retirement fund is diverted to interest and loan repayments. Debt not only slows progress towards achieving goals, but it also acts like rust on savings, eroding their value. Therefore, it is advisable to settle the debt as soon as possible so as not to impede future growth. New Year’s resolutions to pay off debt can be difficult because they require a lot of time, money, and focus. This is especially true if you have student loans that need to be repaid. A budget can help you reduce your debt because it helps you avoid excessive spending such as credit card membership fees and the buildup of debt. increase. Additionally, when it comes to mortgages and student loans, you can use your investment income to pay off your debt. To do so, invest in options that generate high returns. You can also work with a financial advisor to develop a debt repayment plan.
3. Create an emergency fund
With the war between Ukraine and Russia raging and inflation reaching record levels in the United States, it could be a while before things return to normal. Due to the uncertainty brought about by these factors, it is important to have an emergency fund on hand. A good financial solution for the New Year is to build an emergency fund that includes at least 6-12 months of household expenses. This fund helps meet financial or medical emergencies if you get sick or lose your job or insurance. If you don’t already have one, make it a priority to start building your emergency fund. Keep your money in a bank account or liquid mutual fund that can be easily converted into cash in an emergency. Choose low-risk options that protect your money from market ups and downs. Also, make sure you have adequate insurance. Choose the right insurance product based on your age and financial needs. Ideally, you should have health insurance, homeowners insurance, life insurance, auto insurance, long-term care insurance (if you have aging parents or are retired), and more. It will give you much-needed peace of mind and get things back on track for the new year.
4. Start investing to secure your financial future
This New Year tries to build new financial habits, such as investing more. Doing so will not only help you grow your net worth, but it will also act as a means of combating the effects of inflation.Investing your savings will help you prepare for retirement, meet your financial goals, and protect your future. can do. Choose investments based on your risk tolerance. If you have a high risk appetite, build an equity-focused portfolio. High-risk investments such as stocks, high-yield bonds, and real estate investment trusts (REITs) can generate high returns that beat inflation over long investment horizons. On the other hand, if your risk tolerance is low, you can make conservative investments such as corporate bonds, municipal bonds, or government bonds. These options help protect capital and are ideal for individuals nearing retirement and looking to secure their retirement savings. You can also choose to build a well-diversified portfolio that combines both high-risk and low-risk investments. Set aside an investment budget that you can comfortably invest in each month. This allows you to stay focused on reaching your financial goals on time and never stray from them. Contact a financial advisor who can help you create a well-diversified portfolio according to your current and future goals.
5. Open a retirement account such as a 401k, IRA, etc.
Opening a retirement account is the first step to securing your golden age. Start saving young to give yourself enough time to reach your retirement financial goals. If your workplace offers a retirement account such as a 401(k), try to make the most of your donation. A 401k is a tax-advantaged retirement savings plan that allows employers to match employee contributions to their accounts. There are two main types of 401k, his traditional his 401k and his Roth 401k. The former allows tax deferral on contributions, but withdrawals are taxed at retirement. The latter allows for tax-free withdrawals upon retirement, but the contributions are taxable. For 2023, if you’re over 50, you can donate $22,500 annually plus her $7,500 as a catch-up contribution. You can also open an Individual Retirement Account (IRA) specifically created for self-employed people who are unable to open a company-provided account such as a 401k. Like a 401k, an IRA is a tax-advantaged retirement savings account. For 2023, if you are 50 or older, you can add a total of $6,500 to your IRA account to add $1,000 annually. Like the 401k, the IRA also offers both traditional and Roth versions. Choose the one that best suits your needs according to your current and future tax situation.
6. Make a real estate plan anyone can do
There is a misconception that estate plans are primarily for high net worth individuals (HNWIs). But it’s not. Real estate planning is important for individuals of all ages and income levels. This includes wills, health instructions, trusts, funeral arrangements instructions, powers of attorney, etc. An estate plan ensures that your hard-earned money and assets stay intact and pass safely to your beneficiaries without taxes or wastage. legal fees. The new year is a good time to take stock of your financial situation. Use this opportunity to create an estate plan that reflects your current wishes and clearly states how your assets will be divided in the event of your death. If you’ve recently remarried, divorced, widowed, or had children in the previous year, be aware that you’ll need to revise your estate plan to reflect those changes. Talk to an advisor who can assist you in drafting a real estate plan if you wish.
Take the first steps toward long-term financial security and stability this year by implementing the financial tips above. It’s okay if you can’t make financial decisions right away. However, be consistent and try to adopt these tips gradually as the year progresses. Contact your local financial advisor.use WiserAdvisor’s Free Advisor Matching Service You can find a highly qualified and vetted financial advisor suitable to help you. Answer a few quick questions to find 1-3 Financial Her Advisors best suited to meet your financial requirements.