As we turn the corner on the first month of 2023, now is the perfect time to reflect on the New Year’s resolutions many of you will likely have set just a few weeks ago.
Of the many different New Year’s resolutions people tend to set for themselves, one of the most common is increasing your savings, paying off pesky debt and setting yourself up for future financial success.
This is, at least, according to a recent Bank of America survey, which notes that out of the 2,008 customers surveyed, around 80% had already set new financial goals for 2023. These goals include things such as saving for retirement, a vacation, building up an emergency fund and paying off debt such as student loans and credit cards.
Planning for this kind of financial success can seem like a daunting task at times. Beyond reducing your overall spending and trying to increase your income where possible, you might have found yourself wondering how you can make it happen.
In this short article, we will give you some tips that will help you to get on the path to financial success in 2023:
Tip 1: Understand the Economy
One way to set yourself up for more financial success in 2023 is to establish a basic understanding of how the economy works.
Even at a basic level, studying economics can help you to better understand the world around you and how businesses, markets and governments affect your life and livelihood. It can help you to understand how the markets influence public policy which, ultimately, will have a big impact on what your life looks like.
In the current economic climate, this might mean figuring out what causes inflation or why economies slip into recession. Understanding these core concepts will not only help you to understand what is happening in the news but will also help you to decide what actions you might need to take in the coming year in light of these events.
Once you have gained a basic grasp of some of these economic concepts, you might even find yourself getting less stressed by the news, as the ebb and flow of the economy is suddenly demystified!
Tip 2: Do an Audit of Your Spending Habits
The foundation of any budget or financial plan is to take stock of what your income and expenses look like. This will allow you to see where your money is being spent and, importantly, to identify any areas where you can reduce your spending.
Conducting a full audit of your financials is a great first step before your create a new budget, as it will allow you to get a broad overview of what your finances look like. This might include identifying any savings you have, what your debt load is looking like and whether you can streamline your taxes.
A full financial audit is much more comprehensive than simply creating a budget and will give you a much better picture of where your financials stand. It will also help you to examine your lifestyle and to figure out what changes you need to make to meet your financial goals.
Tip 3: Stay Informed
In addition to understanding at a very basic level how the economy works and the types of macroeconomic trends you need to look out for, it is also important to keep yourself informed throughout the year.
We recommend trying your best to stay up to date with all the latest financial news and trends. Being aware of what is going on at a macroeconomic level in the world will help you to make informed decisions about your own money.
Consider subscribing to financial newsletters or picking up the weekly business newspaper on the weekend to give yourself a high-level overview of what went on during the week. This information can act as a compliment to your personal financial decisions and might even help you to figure out when the best time to invest or save is.
Tip 4: Strike a Balance Between Managing Your Debt and Investing
As many of us know all too well, debt has a habit of creeping up on us and quietly ballooning to an unmanageable amount. This is particularly true of high interest debt such as credit card debt or car loans, which seem to grow at an exponential rate!
For this reason, one of the most important pieces of advice you can give to someone trying to get their finances in order is to aggressively pay down any outstanding debt they have. Always start with high interest debt, as this will end up costing you more in the long run. Once this is paid off, you can then turn your attention to lower interest debt such as student loans or your mortgage.
Although it is important to pay off any outstanding debt you have, it is also important to balance this with saving and investing for the future. After all, the earlier you can start investing, the longer time compound interest has to work its magic!
Once you have eliminated any high interest debt, we recommend paying attention to investments such as your retirement fund, rather than ignoring them until you have completely eradicated your outstanding debt.
This strategy will allow you to gradually chip away at your debt, while also reaping the benefits of a longer-term investment strategy.
Tip 5: Stay Accountable
Whether you have a specific savings goal in mind or simply want to keep on top of your finances in general, a great way of keeping yourself on track is to find someone who can help to keep you accountable.
Accountability comes in many forms. Even doing something as simple as writing your goals down or telling a friend about them can go a long way towards staying on target.
The easiest way of doing this is to share your goals with a loved one, such as your partner or spouse. This will not only help you to keep yourself accountable to your own goals but will also encourage you to share more when it comes to your finances — something that is particularly important given what a thorny issue finances can be for couples.