Sponsored: Financial Planning for the New Year
With holiday parties, gift buying and cookie making in full swing, it may be hard to think about your finances for the New Year, but now is the time to begin nurturing your financial health for 2023.
There are a number of steps you can take now to ensure you get ahead of the game before January 1. This is especially important this coming year because according to predictions, 2023 is set to be a challenging year economically. Inflation, rising interest rates, lingering effects from the pandemic, elections and other events are impacting the global economic landscape. While we have little control over these large scale influences, we do have some control over our own lives. Take a look at the tips below to ensure you and your family are in good shape before you ring in the New Year.
Review your assets and liabilities: At the conclusion of each year, it’s always wise to write down all of your assets and liabilities. Take a look at how much you have in savings accounts, retirement accounts, trading accounts, and any real estate investments. Similarly, write down any liabilities such as debts, you owe like mortgages, auto loans, student loans or personal loans. They doing this, you have a good starting point for the following year.
Set goals: Goals could include paying off credit card debt, saving for a big trip, building an emergency fund or purchasing life insurance. Others are saving for a down payment for a car or home, initiating a college savings fund, putting more into retirement, or paying off a mortgage or other loan. Financially investing in your future always pays off in the long run.
Update your budget: After you’ve considered your assets and liabilities and created some goals for the new year, it’s time to reevaluate your budget. Are you going to have more assets the following year or more liabilities? Either way, adjustments to your daily, weekly and monthly budgets are most likely needed. Whether your budgeting tactics include a fancy spreadsheet or a piece of notebook paper, you are ahead of the game just by creating one.
Prioritize high interest debt: Whatever your goals, and it’s a must that you pay off high-interest credit card loans. These are such a money suck, especially as interest rates rise. Do what it takes to minimize spending elsewhere so that you can pay off these frustrating loans. One strategy would be to focus on the card with the lowest balance first. While continuing to make minimum payments to all debt, pay as much as possible to the card/loan with the lowest balance. Once that card has a zero balance, begin that payment ritual with the next lowest balance, again paying as much as you can each month. By doing this, you experience the feeling of accomplishment by being able to check off cards/loans as paid in full. A credit hint; don’t close those cards unless there is a fee to keep it. This can improve your credit score by having unused credit. But BE DILIGENT to not use them again or you are right back in trouble.
Review retirement and investment accounts: The end of a year is a great time to review retirement and investment accounts. With each account, decide if you are contributing too much or too little. Obviously, it would be great if you could increase contributions year over year. The stock market is currently unpredictable, so be sure you are watching things closely in terms of buying and selling.
Establish a relationship with a trusted financial advisor: This is extremely important, even if you don’t have significant assets. A trusted financial advisor can look at your total financial portfolio and help you make strategic decisions that will improve your overall financial health. It’s similar to going to a doctor for a yearly check-up to ensure you are in good physical shape.
Involve your partner or family: Sometimes in relationships and partnerships, one person holds all of the financial responsibility. This is not a good idea. Transparency is beneficial when it comes to finances. If you have shared accounts, hold routine meetings to make sure everyone is on the same page. Also, it’s great to involve your kids at the end of each year when looking at the future. You can start with tasks such as budgeting and eventually have them help make decisions about things like selling and trading stocks.
Be gentle with yourself: A final step is to be gentle with yourself. Finances can be stressful and overwhelming, so try not to get too bent out of shape if things aren’t where you want them to be at the end of the year. See the New Year as an opportunity and a blank landscape to make changes that will benefit you in the long run.
This sponsored contentarticle was written in collaboration with United Community Bank. Click here for more information on this financial institution, and all they offer.