28% Are Prioritizing Paying Bills To End 2023: How To Get Ahead Before Next Year
In a recent study, GOBankingRates surveyed 1,021 Americans across the country to dive into their financial outlooks. When participants were asked about their top financial priorities as we approach the end of 2023, 28% said their No. 1 goal is being able to pay their bills.
In an economy where costs keep climbing, nailing the basics, like having a roof over your head, is already a win. But if you want to wrap up this year on a high note and get a head start on 2024, consider making a few extra financial moves beyond just handling the bills.
As 2023 comes to a close, it’s time to take a deeper look at your financial game plan. Here are five key financial moves to round off the year and set the stage for a successful start to the new year.
Understand Your Financial Situation
“The end of the year is a great time to review your current financial situation and assess the past year,” said Ashley Rittershaus, a CFP and founder of Curious Crow Financial Planning, a fee-only comprehensive financial planning firm.
She suggests calculating your net worth by adding up all your assets (what you own) and subtracting your liabilities (what you owe). While there’s no rigid benchmark for the “right” net worth, the goal is to see it trend positively over time.
Besides determining your net worth, Rittershaus recommends analyzing your spending behavior this year by reviewing your cash flow to understand how much income came in and how much of that money went to necessary expenses, discretionary expenses and savings.
“If you met any goals or improved your financial situation in any way over the past year,” she said, “take time to celebrate those wins. For things that didn’t go as well, use it as a learning opportunity.”
If you haven’t already, download budgeting apps like Personal Capital and PocketGuard so you can easily track your expenses as you head into 2024.
Beef Up Your Emergency Fund
Most financial experts recommend saving at least three to six months’ worth of living expenses in an emergency savings account. Let’s say your monthly expenses are around $1,500. In this case, you’ll want to have at least $4,500 to $9,000 in your emergency fund so you’re fully prepared for any unforeseen expenses or sudden financial setbacks — e.g., medical emergencies, car repairs or job loss.
If that amount seems overwhelming, don’t worry. You can start slow by contributing as little as $50 or $100 a month.
“Just remember to set up a separate account for your emergency fund,” Rittershaus said, “preferably a high-yield savings account at a different bank than you normally use, so you won’t be tempted to touch it.”
Save for Known Expenses
As we get ready to bid farewell to 2023, many of us are also gearing up for a spending spree. From holiday gifts and Thanksgiving dinners to New Year’s travel plans, these expenses can quickly add up and put a dent in your bank account.
To navigate these anticipated costs wisely, Rittershaus recommends establishing a dedicated savings account so you’re not maxing out your credit cards.
“It’s best to set up a separate savings account (not your emergency fund) for these types of known expenses that occur less often and save throughout the year,” she advised.
If your budget is tight, consider taking on a part-time job, selling your used items online or taking on extra freelance work to stash away cash before the holiday comes. This way, you won’t be stepping into the new year carrying overwhelming credit card debt.
Develop Goals and Actionable Next Steps for 2024
“When you take a look at your overall financial situation, my guess is that you may see some areas you’d like to improve,” said Rittershaus.
With the new year just around the corner and that fresh motivation kicking in now’s the prime time to gear up for financial success.
“Take a moment to set achievable goals for 2024,” she said, “figure out the game plan to get there and automate whatever you can.”
For example, if your emergency fund is not quite where you want it to be, automate a transfer of $100 per month into it. Or, if you want to build a cushy nest egg for retirement, develop a saving strategy based on your desired retirement lifestyle. You can use a retirement savings calculator to determine the exact amount to put away each month. And if you’re drowning in high-interest debt, start tackling it head on with the debt avalanche or snowball method.
Navigating all of this can be overwhelming. Consider working with a financial planner to help you map out a personalized financial game plan for 2024 and beyond.
Make Smart Tax Moves
As the curtain falls on 2023 and tax season approaches, making smart tax moves can set the stage for financial success in the coming year. This might involve capitalizing on tax-deductible contributions to retirement accounts, taking full advantage of employer matches on 401(k)s, exploring tax-efficient investment strategies or making charitable contributions to eligible organizations.
Consider working with a tax professional like a certified public accountant or certified financial planner for tailored guidance and advice.
If you’re self-employed, the end of the year is also a great time to start gathering and organizing your personal information, collecting the documents for any tax deductions you plan to take, and planning ahead for the upcoming tax season. By doing so, you’ll avoid unnecessary stress when it’s time to pay Uncle Sam.
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