The beginning of a new year presents an opportunity to think back on the previous year and make plans for the future. Setting yourself up for success in 2023 and beyond can include revisiting both your financial and personal objectives. If you are not sure where to start when it comes to your 2023 financial goals, speak with an advisor at Vincere Wealth Management to get started today.
Let’s take a look at how we can go about doing that.
You should review your budget to determine where changes should be made. Imagine that your income has changed since you last reviewed your spending plan, or that you have accrued additional debt or repaid a loan.
You can stay on track to achieve your objectives and ensure that you're setting aside enough money to pay your expenses and attain your goals in a timely manner by taking stock of how much you're spending and how you anticipate that will change in the new year.
Additionally, this is a good time to plan how you'll add to your savings or pay off any debt you've accrued as a result. If your compensation changes, it's a good idea to review your budget and assess how the change might affect your cash flow. Increases in earnings present possibilities to build savings, reduce debt, and set away extra money for purely personal expenses like entertainment and travel.
To avoid throwing your budget off course, try to foresee any significant expenses you'll have in the following year so you can start saving for them now. Annual insurance premiums and tax obligations are two examples of expenses that can snuck up on you and deplete your cash reserves. You can better plan how you will pay for larger expenses and prevent going into debt if you anticipate when they will arise.
A fantastic strategy to make sure you're contributing to your financial goals is to automate your investments and savings. When faced with the choice of spending money on something we can have right away vs saving it for something we'll need in the future, we occasionally opt to spend now. You can avoid making this choice by automating your savings.
Most banks allow you to set up automatic deposits from your internet account into your brokerage account.
You don't even need to remember to invest the spare change from routine purchases thanks to the Acorns app, which invests it for you.
Even though putting money away for retirement might not be at the forefront of your mind on a day-to-day basis, it is essential to keep track of your savings and increase the amount you put in as you get older. This will allow you to take advantage of any potential employer matching contributions and ensure that your retirement fund continues to grow.
It can take anywhere from one to two pay periods for you to see any changes in the amount of money being contributed to your 401(k). If you do not believe that you will be able to make these adjustments in time, the good news is that you have until April 18, 2023, to make any contributions to your IRA for the year 2022.
Read more about the 4 Retirement Tools You Should Be Using
You may have tapped into your emergency fund quite a bit this year with the rise in inflation in 2022. Who can blame you? . After all, that is the purpose for which it was created. However, the most essential component of utilizing that safety net is formulating a strategy for how you would restock those assets and putting that strategy into action. Taking on debt with a high interest rate is a risky move; however, if you plan ahead and establish an emergency fund with at least three to six months' worth of costs, you may assure that your larger financial goals will not be disrupted by short-term financial difficulties.
Although there are many beneficial ways to use debt, for most people it is a burden on their budget. When you completely pay off one type of debt, you can put that money toward other financial objectives like saving for a home or increasing your investments. And if you don't even know how much you owe, the debt issue gets even worse.
Many times, individuals are frightened to look at such numbers, but you have to be prepared to deal with those feelings. It might feel considerably more difficult to manage with debt when we associate it with feelings of guilt or shame. The good news? You don't have to do this alone; our affiliated Vincere Wealth Management team can create a strategy that is realistic and tailored to your objectives! A simple place to start is by just looking at your debt balances. You may check the debt balances for each credit line you have, including all of your credit cards, auto loans, school loans, and more, if you use Experian.
Use the debt snowball strategy, which is making only the minimum payments on all other debts while concentrating on paying off the debt with the lowest balance the fastest. They are able to pay off one account faster as a result, which gives them a sense of accomplishment and inspires them to continue.
Last but not least, educating yourself on what you don't already know about money is one of the most effective things you can do to better your financial status in the upcoming year. Passive money management can result in blunders with your money that ultimately end up costing you more. Improving your financial knowledge can assist you in creating a successful environment for yourself. We must all make the commitment to take our financial life to the next level, and education is the key.
You might begin by reading personal finance books and listening to some financial podcasts. Check out my money podcast “The Happy Hour Money Podcast” where my partner ,Isaiah Douglass, and I talk about everything finance!
Over time, even minor adjustments to your spending patterns, debt repayment plan, savings rate, and budget might result in significant advancements toward your financial objectives.
With the help of a fiduciary financial advisor to help guide your decisions, you stand a much better chance of retiring comfortably—and maximizing your sources of income so you can live the life you want.
Contact Vincere Wealth to start today.