As we say goodbye to 2022, a year filled with financial challenges like inflation, high interest rates, rising oil prices, and signs of an economic downturn, it’s a great time to get our finances straightened out for 2023. Even though we’ve faced some tough financial times, there are still plenty of ways to boost our financial health.
As the year winds down, let’s get ready for the next one by ensuring we’re on solid financial ground. Taking care of your financial records now will help you start 2023 in a strong position. Go through your financial documents, get rid of what you don’t need, and organize the rest.
Here are six practical strategies to improve your finances for the upcoming year:
1. CREATE A BUDGET FOR 2023
Your budget is crucial to financial success. A well-planned budget will help you handle unexpected expenses next year. Budgeting is a personal process, so find a system that works for you, whether it’s a spreadsheet or a budgeting app. Stick to your budget all year with the help of tools like Quicken and Mint, which can help manage bills, credit cards, and savings.
2. SET YOUR FINANCIAL GOALS
Knowing what you want financially can keep you motivated. Think about what you hope to achieve. Do you want to pay off student loans, save for a vacation, or stop living paycheck to paycheck? Understanding your goals will help you manage your spending and income better.
3. DEVELOP A DEBT REPAYMENT PLAN
Debt can be helpful or harmful, depending on how it’s used. Many of us need some debt to buy things like homes, but it becomes a problem when it gets out of control. A 2022 survey showed that over 31% of American adults have more than $1,000 in credit card debt. Plan to start paying off your personal loans and mortgage before 2023 begins. Reducing debt can free up money for saving and investing. Try not to take on new debt until you’ve made progress on your current balances.
4. CANCEL UNUSED SUBSCRIPTIONS
It’s easy to rack up subscription services with today’s technology and tempting trial offers. However, these costs can add up. Review your subscriptions and cut the ones you don’t need. Keep essential ones like home security or antivirus services but categorize others as “wants” or “needs.”
5. SAVE CONSISTENTLY EVERY MONTH
Make sure your budget includes a plan for regular savings or contributions to an emergency fund. You can do this by increasing your 401(k) contributions, setting up automatic transfers to a high-yield savings account, and reducing unnecessary spending.
6. SPEND LESS THAN YOU EARN
It sounds simple, but many people struggle with this basic principle. Start by understanding your monthly cash flow—know your income sources and fixed and variable expenses. Once you have a clear picture, look for areas where you can cut costs.
With inflation still high, 2023 could be a year to focus on saving more and spending less. Strengthening your financial position now can make a big difference. Don’t overwhelm yourself with too many or unrealistic goals; to avoid disappointment, set achievable financial targets.
Whether 2023 is a year of financial growth or just increased savings, these tips can help give you an edge. Consider keeping a checklist to track your progress and make adjustments as needed.