Happy New Year, we hope you had a wonderful holiday season and New Year’s. 2022 was certainly a rollercoaster of a year, with inflation at a 40-year high and the Federal Reserve rising interest rates as a result to combat inflation. However, when a new year rolls around, we like to reflect on the year that has just past and set financial resolutions and goals for the year to come. So, let’s discuss a few great 2023 financial resolutions you can use to ensure you are starting your new year off on the right foot.
Prior to setting your financial resolutions, it’s a good idea to think about goal setting, more specifically, how to set challenging, yet realistic and attainable objectives for the coming year. We often talk about the framework of goal setting, distinguishing between short and long-term financial goals, thinking about your wants versus your needs, and sticking to a strategy to reach your goals. So, now that we discussed a little about how to set those goals, what are some good resolutions to put in place?
Pay Off Debt
Paying off debt seems to be a common financial resolution as we head into 2023. If you have loans or credit card debt, think about creating a plan to pay it off and sticking to it. In this rising interest rate environment, if you have variable interest rate debt, make sure you know what interest rates you are paying and are setting a plan to attack your debt. If you need assistance in setting up a strategy to tackle your debt, consider seeking help from a financial professional!
Set a Realistic Budget
When it comes to finances, we see that individuals oftentimes are stressed about their budgeting and spending. Many Americans are now changing their budgets and re-thinking their spending due to inflationary prices all around. Global food prices hit a record high in 2022, so if you are feeling the impacts of inflation at the grocery store, maybe it’s a good time to review your budget and make sure it still works for you! Next, think about your cash flows, wants vs. your needs, along with long and short-term goals to reach a reasonable and realistic budget that works for you and your family.
Automate & Track Your Finances
If you aren’t already doing so, automating your finances is a crucial way to get organized. Aggregating all your accounts into one place that is accessible at the click of a few buttons on your smartphone or laptop can drastically change how you view your overall financial picture.
Saving For Big Purchase/Goal
Whether it’s a new home, college, or a kitchen renovation, we know saving for a big purchase can be stressful. In a Launch Financial podcast episode with David Pearl, we discussed intentional and smart spending, and how there can sometimes be a psychological disconnect when saving for and actually spending money on a large goal. This disconnect and sense of stress is very common when saving for a big purchase, which is why it’s crucial to set up a savings plan and budget that works for you.
Increase Your Retirement Savings
The retirement contribution limits for 2023 have recently increased. If you are unaware of the retirement inflation-adjustments, click here for a breakdown of those changes. This increase in contribution limits is a great opportunity to ramp up your retirement savings in 2023. Also, if you are not taking advantage of your company 401(k) match, now is a great time to do so.
While these are only a few financial resolutions that may help you improve your financial stability and situation in 2023, there are endless moves that can be made to better your overall financial outlook.