6 Money Resolutions To Get Your Finances on Track for 2023
Have you thought about your financial New Year’s resolutions yet? If not, now is a great time to start. Over 27% of American adults say saving more money is their top financial goal for 2023, according to a recent GOBankingRates survey. Around 23% plan to get out of debt, and another 23% want to make more money.
What practical steps should you take to reach your goals next year? Here are the top money resolutions financial experts recommend if you want to get your finances on track in 2023.
Set a Budget To Achieve Your Goals
Hoping to save enough for a big purchase next year? GOBankingRates found that over 40% of adults are planning to buy a car in 2023, more than 26% expect to take an expensive vacation and around 24% would like to buy a home.
To reach your savings goal, though, you’ll need a budget, said Jay Zigmont, CFP and founder of Childfree Wealth. Creating and sticking to a budget throughout the year can help you stay on track with your savings and avoid overspending.
“It doesn’t matter if you follow a cash-stuffing approach, use an app, or just put it down on paper,” Zigmont said. “You just need to have a plan for your money each month. Your first month of budgeting won’t be perfect, but the key is to keep at it and keep making improvements.”
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Pay Off Your High-Interest Debt
Many financial experts will tell you that, although not all debt is harmful, high-interest debt can quickly put a strain on your finances. According to a 2022 GOBankingRates survey, over 31% of American adults have more than $1,000 in credit card debt.
Paying off these debts can free you to invest, save and enjoy more of your money. Start by making sure you understand all the terms and conditions of your current loans, said CPA and finance coach Tatiana Tsoir. Try to make this a habit before taking on any new debts, too.
“Many people don’t understand the terms of their credit cards, bank accounts, loans, or cash advances,” she said. “Know what you’re getting yourself into and whether it’s going to help or hurt your financial situation.”
Contribute To a Retirement Account
“Are you contributing to a 401(k) or have access to it? If not, are you contributing to an IRA?” asked Samantha Garcia, a wealth advisor at Halbert Hargrove.
Start contributing to a retirement account now rather than later. Even if you can only contribute a small amount at first, starting early gives compound interest time to work in your favor.
Build an Emergency Fund If You Don’t Have One Yet
“You need to know if you can pay your medical bills and living expenses,” Tsoir said. “Do you have money available in case of an emergency or job loss?”
GOBankingRates found that over 22% of people who had a financial emergency this year had to pay for it with a credit card, and another 11% borrowed from a friend or family member to cover the expense. In light of recent economic troubles, it’s a good idea to make building an emergency fund one of your top financial priorities in 2023.
Many financial experts recommend saving six months’ worth of living expenses. But if that’s not realistic for you, start with $500 or $1,000. As long as you’re putting money toward this fund each month, you’re headed in the right direction.
Prep Your 2022 Tax Return Early
Don’t wait until March to start preparing your 2022 tax return, said Mark Henry, founder and CEO of Alloy Wealth Management. If you work with an accountant or CPA, get in touch with them as soon as possible to look at how much money you made this year, how much you paid in taxes and how much you can deduct.
This is especially important for business owners or self-employed freelancers. You may find you need to make another estimated tax payment, or you may want to increase your charitable giving before the end of the year.
Consider Making Roth Conversions
If you have a traditional IRA, you may have lost money this year with how turbulent the market has been, Henry said. In that case, consider making a Roth conversion so that you won’t have to pay taxes on gains when the market bounces back.
“A Roth conversion is when you take money out of a traditional IRA or 401(k) that you haven’t paid taxes on yet, pay taxes on the withdrawal, and move the money to a Roth account, where it can grow tax free until you retire,” he explained.
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Methdology: GOBankingRates surveyed 1,028 Americans aged 18 and older from across the country between November 14 and November 18, 2022, asking twenty different questions: (1) What best describes the impact of Biden’s student loan forgiveness plan on you?; (2) How do you think student loan forgiveness will affect the economy in 2023?; (3) Describe your working situation in 2022; (4) Which best describes your working situation?; (5) What do you prefer your working situation to be in 2023?; (6) Did you look for better value in your job in 2022?; (7) Are you planning for any major job changes in 2023?; (8) Which of the following economic factors impacted your finances the most in 2022?; (9) What would you like to have happen the most in 2023?; (10) Are you in favor of more stimulus or inflation relief checks in 2023?; (11) If you had a major financial emergency in 2022, how did you pay for it?; (12) How did your stocks fare in the bear market of 2022?; (13) Did you put off a big purchase in 2022 due to the strained economy?; (14) What best describes the impact the Fed raising interest rates has had on you?; (15) Which best describes your top financial goal for 2023?; (16) Are you planning for any of these major milestones in 2023? (select all that apply); (17) What is your top financial stressor heading into the new year?; (18) If you are a small business owner, what has been your biggest financial challenge in 2022?; (19) How do you feel about the Social Security cost-of-living adjustment (COLA) of 8.7% for 2023?; and (20) How did social media most impact your finances in 2022?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
GOBankingRates surveyed 1,003 Americans aged 18 and older from across the country between September 19 and September 20, 2022, asking twelve different questions: (1) Which of the following is the most important to you when it comes to picking a new Credit Card?; (2) How do you handle your Credit Card bill each month?; (3) Do you know your Credit Score?; (4) What age did you get your first credit card?; (5) What is your primary purpose for using your credit card(s)?; (6) Do any of the following statements apply to you? (Select all that apply); (7) Which credit card fees do/would you hate the most?; (8) How many Credit Cards do you own?; (9) What is your total current Credit Card debt?; (10) How long do you think it will take you to pay off your Credit Card debt?; (11) Have you ever hit the credit limit on your credit card?; and (12) Have you ever charged any of the following to your Credit Card? Select all that apply:. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.