While gym memberships may rise at the start of the new year, don’t forget your financial health as you begin planning out your resolutions and goals.
Entering into a new year is the perfect time to take a moment and reflect on your financial goals for 2023. Not sure where to start? Here are some important areas of financial wellness to focus and check-in on this January.
Revisit the budget
Inflation and price increases have been affecting households across the country and squeezing budgets. If you haven’t already done so, now is a great time to review your current expenses and start planning for the months ahead.
There’s no “one-size-fits-all” when it comes to budgeting methods, but a start for any basic budget is to take a look at the money coming in compared to the money going out. Start by reviewing your spending from the last few months and put them into two simple categories of “needs” or “wants”. Needs may include things like rent/mortgage, groceries and utilities, and “wants” may include things like streaming services, or take out. After you’ve made your list, go through the expenses and see if there are any tweaks that you can make to cut back on your monthly expenditures. You may be surprised by how much you can save each month with a few thoughtful changes to your budget (i.e. do you need more than one streaming service?)
Be “rainy day” ready
In a 2022 poll, sponsored by Bankrate, 56% of Americans were unable to cover an unexpected $1,000 bill. Creating an emergency savings account, or a “rainy day” fund, will provide you a buffer if the unexpected should arise. Aim to have at least $1,000 stowed away, then work towards a long term goal of having three to six months of expenses saved. Set aside a portion of each paycheck and utilize direct deposits or automatic transfers to make the saving process easy.
Check-in on your credit score
It’s a smart idea to carefully review your credit report for accuracy at least once a year. Your credit report (which contains your credit score) is a key financial document used by lenders to determine if you’re eligible for a loan, and it may also be checked when you apply for a job, sign up for insurance, or look to rent a property.
If your credit score isn’t where you want it to be, there are several key things you can do to help improve it, such as: paying bills on time, not opening too many credit accounts, and maintaining a financially healthy balance between credit available to you and credit you use, all of these can boost your score over time. If you want to learn more about how you can check and improve your score this year, dive deeper into the topic here.
Don’t ignore your debt
Debt can be a significant cause of financial stress. To gain more control over your financial health, evaluate how much you owe in debt and face it head on. Interest on loans can add up fast, so work to find a debt payment strategy that works for you, and then stick to your plan to stay on track. Some individuals choose to pay down loans with the highest interest rate first, and others try to get rid of smaller debt first—find what works for you and commit to your plan.
Step back and look at your long-term plans
It’s helpful to use the beginning of the new year to plan for the next 12 months, but also use this time to audit your long-term financial goals that you may already have in place. These can include big purchases or future expenses such as: purchasing a new home, saving for your child’s college fund, or investing in your retirement account.
After you’ve set your goals and made your game plan, it’s important to carve out the time to evaluate where you are with your goals, and what you can do to reach the next step. It may be helpful to schedule time on your calendar on a monthly or quarterly basis to review your progress.
While taking the time to focus on your financial goals may seem daunting, we’re here to help you along the way. Give us a call 24/7 at 800-860-8821, book an appointment online, or submit your financial questions here.