Rianka R. Dorsainvil, CFP®
We made it! What a year it has been – from supply chain delays impacting cost and shipment to inflation making everyone clutch their purses and wallets a little tighter, we’re here.
This year hasn’t been easy economically and it’s been riddled with uncertainty. Just as we began learning to live with COVID-19 and get back into the swing of life, we were hit with four Federal interest rate hikes, high gas prices, and a competitive housing market.
It’s time to hit the restart button, which means also hitting reset on our financial goals. We don’t know what next year holds, but we can do our best to prepare for whatever the economy throws our way.
Here are 5 financial tips that can get you on the right foot with your finances next year.
Take Inventory of Your Finances
To take your finances to the next level in the new year, evaluate where you are now. You could start by getting out your bank statements, spreadsheets, apps or anything else you use to track your expenses and budget. Take note of where most of your money went throughout the year, new expenses that emerged as the year progressed, and expenses that stopped.
If you set any financial goals at the start of the year, you may also want to explore whether you achieved them and why or why not.
Go Back to The Basics – Review and Reset Your Budget
According to a survey by loan servicing company OppLoans, 73% of Americans don’t regularly budget. While you don’t have to be stringent with your budget, it can be a good way to guide your spending and prioritize important expenses.
Before creating your 2023 budget, review the one you set this year. Ask yourself the following questions during the process.
Are there any spending patterns I can identify?
Was there an uptick on spending in a particular category? Why?
Did I dip into my emergency fund? When and why?
Are there any recurring expenses that I don’t really need and can cut next year?
Will I have any new expenses in the new year?
Is my current budget realistic?
Asking yourself these questions and answering honestly can help you identify your strengths and areas that need improvement. Remember, budgeting isn’t an exercise that should make you feel ashamed–instead, you should feel empowered. Knowing where your money is going can help you strategize and achieve your goals faster.