It is never too early to start thinking about which New Year financial resolution will work best to improve your financial health. Here are five financial resolutions you should make in 2023.
1: Create a budget and stick to it
Being able to stick to a budget is one of the most important steps you can take in your financial journey. By creating a budget, you will be able to understand where your money is going, and you will be more motivated to save and invest.
2. Commit to paying off your outstanding debts
With inflation at record-high levels and student loan forgiveness up in the air, it’s critical you spend 2023 taking control of your finances and getting out of debt. By paying off your debts, you will have more money to put toward your long-term savings and investments.
The first step toward getting serious about becoming debt-free is to make a plan. There are dozens of debt payoff methods, but many choose to work with the Snowball or Avalanche methods as both play off different motivations.
The Snowball method works by organizing your list of debts in order of amounts owed. In this strategy, you’ll make minimum payments on your debts except for the least-owed debt. For the least-owed, you’ll put extra money toward that until it’s paid off, then move on to the next lowest, and so on.
If you’re someone who needs quick wins to stay motivated, try the Snowball method.
If you’re more pragmatic and can wait for the long-term benefits, look into the Avalanche method instead, as it will save you more money in the long run.
The Avalanche method lists your debts in order of interest rates instead of amounts owed. For this strategy, you’ll make the minimum payments on your individual debts, but focus on knocking out the debt with the highest interest rate first, then moving down the list once that’s paid off.
3. Invest in yourself by taking classes or getting certified
Education is always considered an appreciating asset or a “good” debt because it will give you lifelong value. Investing in your education by taking classes or getting certified will help you improve your finances and give you the skillset you need to get ahead in the workforce.
4. Automate your finances
As your income grows and bills get paid on time, it’s crucial to automate as much of your finance as possible. This means setting up automatic payments for your bills, transferring money from one account to another, and investing in software that can help you manage your money more efficiently.
5. Review your financial situation
Too often, we’ll get complacent about our finances, especially regarding retirement contributions, health insurance premiums, etc. Instead, commit to making 2023 the year you sit down and review where your money goes and if it could be better optimized.
Start looking into the different tax-advantaged retirement accounts, see if there’s a better employer-match rate you could be getting for your contributions, and review your health insurance plan to see if it’s still the best for your health or if there’s a better option out there. Who knows, you could end up saving even more money that can go toward paying off debt or even treating yourself once in a while.
The bottom line
Making these financial resolutions will not only improve your quality of life but also put you in a better position to achieve your goals and dreams in the future.
Name: Michael Bertini
Job Title: Consultant