With the new year approaching, many are getting ready for their 2023 resolutions. While creating your list, it’s the perfect opportunity to set your financial goals for the year and get on track to a financially stable future.
Assessing and organizing your finances can feel like a daunting task, but with the help of a few well-structured goals for the year and the advice of your financial professional, you’ll find yourself meeting milestones in no time. Let these five financial goals inspire you to start the new year off right.
1. Draft a Monthly Budget
While this may seem like common sense, many people find it hard to set a budget and stick to it, if they even begin the task at all. A monthly budget lays the foundation for gaining better control of your finances, and the more detailed it is, the more certain you can be that it will remain feasible from month to month.
When creating your budget, make sure that every penny is accounted for, including savings, investments, clothing, food, entertainment, etc. It can not only help you realize how much you spend each month, but will also help direct your focus to the areas where you can improve and decrease spending, resulting in extra money to dedicate to other functions as long as you stick to your budget.
2. Prioritize Your Emergency Fund
The quickest way to derail a monthly budget is an unexpected expense, such as medical bills, major vehicle repairs, job layoffs, or house maintenance; the easiest way to ensure such events don’t impact your budget is to maintain an emergency fund. The recommended rule of thumb for emergency funds is to start with a month’s income plus $1,000, then keep saving until you have about six months’. Set aside a certain amount each month in your budget for additions to your fund, and remember that if you have to use it for an emergency at any point during the year, you will have to regrow it.
3. Plan To Take Control Of Your Debt
Debt is often one of the major factors holding people back from reaching their metric for financial success. Your financial professional can help you create a strategy to tackle, reduce, and hopefully eventually eliminate your debt altogether. Together, you can begin by determining a reasonable and, importantly, attainable amount of debt that you would like to reduce over the next year; then, calculate how much you will need to pay each month in order to reduce your debt to the goal amount; the final step will involve looking back at your monthly budget and identifying whether or not you can fit these payments into its current iteration and, if not, areas where you can cut back spending to make them fit. It is also incredibly important to make sure that you do not add any more debt throughout the year.
4. Include Retirement Savings Now, Not Later
Saving for retirement is too often put on the back burner until it is too late. The sooner you begin putting away money for retirement, the more time it will have to grow and the better return on investment you will enjoy. There are many methods for accumulating retirement savings, from setting aside money monthly on your own, similar to an emergency fund, to employer-sponsored funds such as a 401(k). Your financial professional can work with you to determine the best methods for retirement savings based on your current lifestyle, career, income, and several other factors.
5. Create a Long-Term Financial Plan
While setting financial goals that you can hit by next December is a great way to get your finances back on track in the short-term, it can be difficult to stay motivated to reach them without anticipating the rewards that come with financial stability. During your planning, consider any of your long-term financial goals, such as buying a house or retirement. You can even write down some of the specific aspects about those achievements that you are particularly looking forward to, which will help you remember and maintain your excitement and improve your chances of staying true to your smaller goals throughout the year.
Use these five goals as a guide for your planning, and work with your financial professional to ensure you receive advice and recommendations that fit your personal circumstances. Make 2023 the year you take full control of your finances and make progress towards the future about which you’ve been dreaming.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.