Financial New Year’s resolutions can be challenging to make and easy to break. Take the headache out of financial planning in 2023 by setting simple, achievable financial goals. Here are our top New Year financial resolutions to help you stay financially secure and grow your personal wealth next year.
Build an Emergency Fund
If you only choose one financial resolution for 2023, work to build or grow your emergency fund. With living expenses rising, saving money for a rainy day is more important than ever. The ideal size of your emergency fund depends on your lifestyle and expenses. At a minimum, aim to have enough to cover your expenses for three months. Building an emergency fund could be as simple as deciding how much of your surplus income to set aside each month. A great tip is to put this sum in a separate bank account as soon as you receive your paycheck—that way, you aren’t tempted to spend it.
If you rarely have money left over at the end of a paycheck, it’s time to figure out where you can cut back on spending. Ask yourself if you really need that new gadget you have your eye on, or whether you could whip up a few more meals at home instead of eating out so often. If you don’t want to rein in your spending or if you don’t have any wiggle room in your budget, consider picking up extra work and putting the additional income into savings.
Sample goal: Set aside $___ per month in a savings account to build or grow your emergency fund.
Pay Down Debt
Creating a strategy for reducing your debt is an excellent way to start the new year with a clean slate. It might seem daunting, but this is an easy financial resolution to keep if you set a realistic goal. Start by making a list of all your debts, how much you owe, the minimum monthly payments, and the interest rates. This will help you decide how best to tackle your debts in the new year.
Once you have all your ducks in a row, you have several approaches to take on credit card debt and other costly bills. The two most popular approaches are:
- Paying off the debt with the highest interest rate first (the avalanche method).
- Paying off your smallest debt first and working your way up (the snowball method).
You can also consider consolidating your debts to make them easier to manage, looking for a credit card with a low-interest rate, and creating a budget in order to put a consistent sum toward paying down your debt.
Sample goal: Pay off your smallest debt by the end of the year by paying off $____ per month.
Maximize Your Retirement Savings
There’s no time like the present to start planning for the future. One of our top financial planning tips for the new year involves maximizing your retirement accounts to improve your long-term financial health.
Whether you are just starting out in your career or are a seasoned professional, retirement savings should be front of mind to improve your financial wellness. Saving for retirement is a long-term investment, so the earlier you start and the more you save, the better you are setting yourself up for success.
Take steps to boost your 401(k) as part of your new year financial goals. According to Forbes, you should set aside at least 10% of your salary in your 401(k). If your employer matches your contributions, consider putting in a little more so you’re taking full advantage of this opportunity.
If you’re eager for more ways to enhance your retirement savings in the new year, look into where your retirement fund is being invested. A diverse investment portfolio with an eye on long-term growth will offer the best returns.
Sample goal: Put ___% of your monthly income into your 401(k).
Reassess Long-Term Investments
On the subject of investments, if you’re ready to look beyond your retirement fund, set a new year’s goal to make sure you’re making the wisest financial investments. Creating a diverse investment portfolio is the best way to ensure your savings stay ahead of inflation. If you already have investments, make a new year’s resolution to review your investments and see if you are on the right track.
If you’re looking for investment opportunities in the new year, consider the following options:
- Bonds. Bonds are low risk and offer small but reliable gains. This is a good place to start if you are new to the world of investment and worried about risk.
- Index funds. If you aren’t confident in your ability to pick stocks, an index fund is a good choice. It offers a wide spread of investments with low risk.
- Mutual funds. Buying shares in a mutual fund will provide you with a diverse portfolio. The benefit of a mutual fund is that it is actively managed compared with passive index funds, so the rewards might be higher—but so are the risks.
If you are not sure where to start, we recommend downloading an investment app or consulting a financial advisor.
Sample goal: Invest __% of your savings in a diversified portfolio tailored to your financial goals.
Start an Estate Plan
It’s never too early to make a plan for what will happen to your wealth once you pass away. At a minimum, starting an estate plan will ensure your loved ones are provided for in the event of your passing. If you have a considerable fortune, you should also consider how to limit estate taxes, for example by making charitable donations or creating trusts.
On this note, make sure you review your beneficiaries and include any new additions to your family such as a spouse or child entering the scene in 2023. It can be easy to forget to make these important updates, so use the new year as an excuse to double check your beneficiaries. That will give you a timely reason to take this important step every 12 months.
Even if you don’t have a lot of personal finances to distribute, it’s a good idea to set down end-of-life wishes, funeral arrangements, and assign an executor for your will. Make it your goal to live a long, prosperous life—and to have peace of mind about how your wealth will benefit others in the future.
Sample goal: Write or update your will.
Talk with a Financial Advisor
If you want to take control of your finances in the new year but you are not sure how best to go about it, talking with a financial advisor is an ideal place to start. Taking advantage of your financial advisor’s expert knowledge removes the guesswork from setting financial goals in the new year.
Lifetime Advisors Group is ready to help you turn your financial resolutions into a reality. Whether you want to create a realistic budget, explore your investment options, or start planning for retirement, we will create a comprehensive financial plan tailored to your needs.
Sample goal: Contact Lifetime Advisors Group to discuss your financial goals for 2023. It's the easiest resolution to keep.