New Year's resolutions to strengthen your finances in 2023
Jan. 6, 2023
These simple tips can help set you on the right track for financial success in the new year and beyond
Ongoing market turbulence, high inflation and the lingering effects of COVID-19 have impacted investors at every turn during these past few years. As economic factors continue to loom large, it’s vital for investors to focus on what they can control and make financial moves to help position them for maximum gains in the new year.
As you prepare your list of 2023 New Year’s resolutions, we recommend reviewing your finances as well. Realign your budget and expenses, savings goals and investment contributions to priorities that may have changed in the prior year.
Take a look at our list of tips for 2023 to help you work toward your short-term goals for the year, while staying on track with your long-term financial strategy.
1. Make a budget in 2023 and stick to it
The idea of making a budget can feel constricting, but in reality it gives you the power to manage and prioritize your expenses. With spending needs changing on a yearly, monthly or even weekly basis, outlining exactly what you spend against your net income offers a more complete picture of your current finances.
Whether you use a spreadsheet or a budgeting app, first identify key priorities like mortgage/rent, utilities, food and gas. Then look at remaining expenses in descending order of importance, like clothing, entertainment and vacations. From there, you can reduce spending where necessary and move those funds into more important areas of your life.
Organizing your money according to “Needs,” “Wants” and “Nice-to-Haves” can reveal your day-to-day spending habits and help you live life according to your values, while also meeting your savings and retirement goals.
2. Maintain an emergency fund
You can’t predict the future, but you can certainly plan for it. An emergency fund saves money toward unexpected events, like a job loss, housing or car repairs, or a major accident or illness. If you don’t currently have an emergency fund, the new year is the time to start one.
Maintain about three to six months’ worth of living expenses in a savings account, which can cover you in the event of an emergency—like a loss of income or an unforeseen expense.
3. Pay down high-interest debt
Whether it’s a mortgage, car or college loan, credit card or medical bill, the varying types of debt impact your financial situation in different ways.
While a home loan should help build your equity and an investment in education may increase your income level, high-interest credit card debt can do little more than require you to pay more in the long run.
As 2023 gets underway, consider paying your credit balance in full each month if you can. If you have significant credit card debt, build your budget around paying down what you owe to save on interest and other fees.
In the new year, spending less than you earn and avoiding high-interest debt can enable you to earmark more money for your financial goals.
4. Work on your credit score
Your credit score is a key factor in your financial health. If you’re planning to buy a house or car, or looking for a low-interest loan for other high-end purchases, a higher credit score will yield a better interest rate, saving you cash in the long term. It can also lower your insurance premiums and provide access to other financial services you may need.
If your credit score hovers below 700, you can improve it by paying down debt, paying your bills on time and in full, and limiting your spending overall.
You can also check your score with a free credit report from Experian, Equifax, TransUnion and other firms, to help ensure you’re on track.
5. Review your life and health insurance needs
With 52% of retirees and 66% of pre-retirees noting health care costs and long-term care as their top financial concerns*, insurance coverage for your life, disability, health and home should be a top priority in your strategy. However, navigating the type and amount of coverage you need, as well as premiums and deductibles, can be confusing.
As 2023 approaches, make it a resolution to audit your current insurance policies, and identify which of your policies still fulfill your needs, and those where your premiums are too high or coverage is lacking. But be careful not to sacrifice coverage you need for lower premiums.
Your financial advisor can help navigate your insurance needs and budget upfront costs, like premiums and deductibles, into your monthly and yearly expenses. Your advisor can also guide you toward the type and amount of coverage that aligns with your needs over time.
6. Review your accounts with your financial advisor
When it comes to getting the best return on investment from your financial advisor, communication is key. Your list of 2023 financial resolutions should include noting changes in your personal and professional life and keeping your advisor in the loop.
As your needs evolve, your advisor can help rethink your budget and expenses, contributions and investing strategy, and ways to help achieve short-term gains while fulfilling long-term goals.
We recommend making an appointment with your financial advisor in the new year, level-setting your needs and updating your strategy for a successful and fulfilling 2023.
Choosing the right financial advisor
If you’re considering working with a financial advisor, you can get started with Edward Jones today. We’re a firm built on relationships, and our advisors are committed to creating personalized strategies to help you achieve the future you want.
Take a simple quiz and get matched today.
*Source: Age Wave/Edward Jones, The Four Pillars of the New Retirement, 2020 (Base: U.S. retirees and pre-retirees within 10 years from retirement)
Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P., and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C. California Insurance License OC24309