It is the end of 2022, and what a year it has been for our finances. We were faced with high rates of inflation, high-interest rates, rising oil prices, and a looming recession. There is hope though and ways to give your finances a boost.
Amidst these challenges we face, as 2022 winds down, it’s time to look forward to 2023 and put ourselves on the best financial footing possible for the new year.
Set an intention of getting financially organized before the year ends. Organizing your financial documents is an important foundation for optimal financial health. Start by going through all of your financial records and eliminating anything that isn’t essential.
Below are 6 ways you can give your finances a boost before 2023. Take a few moments to review your overall financial health and make sure you’re setting yourself up for ultimate success in the new year!
Create a Budget for the New Year
I do not exaggerate when I tell you that your financial success rests heavily on having a good budget. A budget can help you prepare for costs that come up in the new year. There’s no one-size-fits-all strategy for building and maintaining a budget, so to budget for the long term, you need a system. Whether it’s a spreadsheet or a budgeting app, put a plan into place to maintain your budget throughout the year. Quicken and Mint both offer budgeting apps to manage bills, credit cards, and savings.
Know Your Financial Goals
Having a sense of the goals you want to achieve and how much they’ll cost can be powerfully motivating in achieving your goals
So, take a few moments to think about what you’d like to accomplish. Do you want to pay off your student loans? Take a vacation? Stop living paycheck to paycheck? Understanding what you want to achieve and how much money needs to be left over at the end of each month to make that possible is key to maintaining a spending plan.
Make a Plan To Pay Down Debt
Debt, depending on how you use it, is either good or bad, based on what it is used to purchase. For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset to pay back over time, such as a home. However, problems arise when debt becomes more of a burden than a tool.
According to a 2022 GOBankingRates survey, over 31% of American adults have more than $1,000 in credit card debt.
Take a few minutes now to set how much you plan to pay on your personal loans, debts, and home mortgage accounts before the new year. Paying off these debts can free you to invest, save and enjoy more of your money. Try to build a debt repayment habit before taking on any new debts, too.
Drop Unnecessary Subscription
Subscriptions are easier to sign up for thanks to smartphones and attractive introductory deals. However, once the honeymoon period is over, costs can get surprisingly high. If one of your goals is to get your finances in line, you can start by canceling monthly or annual subscription costs.
Take a look at every service you subscribe to and see if there are any you could eliminate. Keep the subscriptions that maintain your safety, such as home security and antivirus software, but everything else should be bucketed into “want” or “need” piles.
Save Something Monthly
One thing that should definitely go into your budget is how much you plan to put away in an emergency fund or savings account in the new year. There are nearly countless ways to go about this you can increase your 401(k) contributions, set up automatic transfers to a high-yield savings account, and cut back on unnecessary spending, especially during the holiday shopping season.
Spend Less Than You Earn
This concept sounds obvious, but a lot of people fail at this key step. First, understand your monthly cash flow; that is, determine the number of cash inflows each month (salary, wages, interest/dividends, etc.) versus cash outflows each month (mortgage, utilities, groceries, etc.). When you have an accurate cash flow statement, you can then analyze your expenses to determine which are necessary and which are discretionary, or non-essential.
Prioritize those expenses that are necessities. Target the non-essential expenses if you are looking for areas to reduce your spending.
The Bottom Line
Due to record-high inflation, the coming year may be a time when you’ll focus on building savings and decreasing spending. Take this opportunity to give your finances a boost before the New Year. Be cautious about setting too many or unrealistic financial goals. Otherwise, you may be unable to accomplish any of them.
Whether you’re ready to reach new financial milestones in 2023 or you simply wish to save more money, following these practical tips to give your finances a boost can help you stay on top of your finances. It may be a good idea to maintain a checklist to keep track of how you are doing throughout the year so that you can make any necessary modifications.