6 Tips to Help You Succeed Financially in 2023
Following a difficult year like 2022, it is easy to become fixated on the negatives. However, there is still an optimistic outlook for those who manage their finances responsibly. So, how can you get a head start on financial success in 2023? Use these 6 valuable tips to prepare your financial plan for the new year.
1. Make careful decisions about your finances, and don’t overreact.
Making the right investing decisions is easier said than done. But when it comes to financial uncertainty, take a step back before hitting the panic button. It is natural to feel anxious when something derails your financial situation, but it is important to make decisions with a clear mind. When managing your finances, don’t have knee jerk reactions to market ups and downs. Instead, have a long-term plan for your investments and stick to it.
Take the necessary time to consider your options and talk to a financial planner before making critical financial moves. Many of these decisions are complicated, and it helps to have experienced professionals on your side. With the right help and careful deliberation, you can get a jump start on financial success in 2023.
2. Assess Your Personal Situation
Take a snapshot of your complete financial situation now, so you can be prepared for the coming year. Everything about your personal financial situation should be reviewed and documented – from income to expenses, debt to investments. Depending on your situation, this process can be simple, or it can be incredibly complex.
A clear picture of your financial situation can help reduce anxiety. In addition, understanding your current financial position is the first step in crafting and maintaining an effective financial plan. If your income or expenses changed substantially in 2022, speak with your advisor to update your plan.
3. Trim Unnecessary Costs – Free Up Cash Flow for the New Year
Once you understand your cash flow in detail, you can review your budget to look for unnecessary spending. Identify purchases that aren’t important to your life or categories where you are overspending. Then, consider eliminating costs where possible.
It can be difficult to learn disciplined spending, but with time, it becomes easy. By trimming unnecessary costs, you will free up funds that can be used to save or invest in the new year.
4. Build an Emergency Fund
An emergency fund that is large enough to cover several months of expenses can help you rest easy during uncertain times. If you have not started your emergency fund, begin right away.
Even if you are only able to tuck away a few dollars each month, those funds will be valuable in a pinch. And if you invest your emergency fund, interest earned can help it grow even faster. Most importantly, an emergency fund can help you avoid relying on credit cards or loans during an emergency. With proper preparation, you can weather the next downturn with confidence.
5. Have a Plan to Address Debt
Ideally you are not carrying a large amount of revolving debt, but you most likely have some installments such as personal loans, automobile loans, or mortgages. Too much debt can hinder monthly cash flow and the ability to save for long-term goals. If you are carrying an unmanageable amount of debt, plan to reduce it in the new year.
To begin reducing debt, tackle obligations with the highest interest rates first. When you’ve paid off the loan with the highest rate, take the funds you would have paid toward that debt and pay down the outstanding balances on your other loans. This strategy will help you minimize interest paid and reduce total debt more quickly. With some discipline and careful planning, you can grow your net worth by reducing your outstanding debt.
6. Let an experienced CFP® guide you into the new year.
Whenever there is uncertainty in the economy or in your financial life, it can be valuable to seek the assistance of an experienced financial planner. The new year is no exception.
There are many considerations at the beginning of each year that can potentially lower your tax burden and position your investments for success, and those decisions are often complex. So, the most important advice you can follow to be successful in the new year is to partner with an experienced financial advisor.
Bonus Tip: Be Confident in Your Plan with Financial Fingerprint™ from Brookstone Wealth Management
At Brookstone Wealth Management, our focus is on coaching, teaching, and mentoring our clients. We help our clients navigate their short-term financial goals while keeping a keen eye on retirement.
Our proprietary wealth management program, Financial Fingerprint™, is a comprehensive financial plan that is quick to assemble, easy to understand, and simple to modify as your circumstances change. With Financial Fingerprint™, and a relationship with an experienced advisor, you can understand your financial picture and the steps necessary to reach financial success.
If you’re looking for assistance in understanding your finances or developing a plan to secure your retirement, contact Brookstone Wealth Management today.