Originally Posted On: https://www.iquanti.com/
Between rising inflation and stock market losses, 2022 has been a rough year for many people financially. While many experts predict that the economy won’t improve until the end of next year, that doesn’t mean you have to wait. Here are four steps you can take right now to protect your finances in 2023 and beyond.
1) Build Up an Emergency Fund
When the car needs a sudden repair or you need to replace a broken appliance, where can you turn for the necessary funding? If you’re living paycheck to paycheck, then your options may be limited, forcing you to turn to high-interest debt.
Save yourself from having to do this by building up an emergency fund. An emergency fund is a liquid, cash account that you can access quickly and without challenge. It should be separate from your typical savings or checking, and it’s not recommended that it be invested because the value may fluctuate.
An ideal emergency fund should have three to six months’ worth of living expenses inside of it. However, even if you can set aside something smaller, like $1,000, this is a good start and offers better protection than nothing at all.
2) Purchase a Life Insurance Policy
No one can predict when tragedy will strike. However, if it does, it can create years of financial hardship for your loved ones. To protect them and give everyone (including yourself) better peace of mind, you’ll want to have a good life insurance policy.
Life insurance should provide coverage equal to 10 to 12 times your income. The idea is that this death benefit should provide at least a decade of income replacement if you are no longer around to provide for your family.
When shopping around for life insurance quotes, you’ll want to decide whether you want a term or permanent policy. There are many versions of each type that range in affordability. Whether or not you’d like to take a medical exam and answer a questionnaire will also affect how much your premiums will cost.
3) Increase Your Credit Score
No matter your financial situation, it’s always important to ensure your credit score is as high as it can go. Your credit rating (also known as your FICO Score) is a score between 300 and 850, where the higher your number, the more creditworthy you appear to lenders.
Even if you never plan to apply for another credit card or take out a loan, there may be a time in the future when you’ll want to. Additionally, a high FICO Score can help you to qualify for better interest rates and lower insurance premiums. For these reasons, ensuring your credit health is good is always an excellent way to help your finances.
4) Contribute Towards Your Financial Future
With the stock market and other investments down, now is an excellent time to increase your contributions to your retirement accounts. The more shares you can buy at a discount and add to your IRA or 401k, the greater your portfolio balance could potentially grow. This move won’t just help make you more financially secure in 2023, but it will also help for decades to come.
The Bottom Line
Make 2023 your year to shine financially. Start by protecting yourself with a robust emergency fund and an affordable life insurance policy. Working on your credit score and adding to your retirement contributions will also make sure your financial future is in good hands