The new year is a magical time because it can create so much momentum for us to shed the past and start fresh in every area of our lives. As you are setting your goals and intentions for the new year, pay attention to the financial cost or side effects that your goal can have. For example, if your goal is to deepen your yoga practice, does that mean you will have to pay for more classes? Or maybe yoga will help reduce stress which is a cause for impulsive spending. Therefore, yoga can save you money. Many of your intentions will have some level of financial impact, so don’t neglect these 10 things that will help support your financial and life goals!
1. Set your goals! Most people create goals at a very high level, but don’t analyze the actions or habits needed to achieve them. When you set your goals this year, try to break them down into smaller pieces and determine how you will measure success. For example, let’s say your goal is to save more money this year. Make the goal to save more money concrete by asking yourself these questions: how much do I want to save every month? How will that affect my spending? Where will I save this money (new savings account)? For how long will I save this amount? How will I know when I have achieved this goal? Is there a specific dollar amount I want to see in my savings account by the end of the year? What can I do now to begin working towards this goal? Remember, goals need to be SMART. Specific, Measurable, Achievable, Relevant, and Time-bound.
2. Track your spending and set a budget. Download Mint or Monarch to start tracking your expenses. Tracking your expenses and income is a crucial aspect for hitting your financial goals. By using these apps, your expenses are automatically categorized so that you can create reports to see where you are spending most, what your overall expenses are, and how much money you are making during the year. Take some time to create a budget inside your new app to accommodate your regular spending and your new year’s goals!
3. Invest in your self-care. One of the best money-saving tips I can give you is to take care of yourself in 2023. Impulsive spending and spending outside of alignment with your primary values usually stems from stress, fear, feelings of inadequacy, or feelings of deprivation. Take time to evaluate your needs. A therapist or massage might seem like a strain on the budget, but the ripple effect of nurturing your well-being may have some financially positive benefits. Be mindful of what is causing you stress and how you can eliminate or reduce this in the new year.
4. Start preparing for 2022 taxes. Start collecting your W-2’s, 1099, or other documents that you need to be prepared to file your 2022 taxes. You can also check out this article on TurboTax for a more comprehensive list of everything you need. If you haven’t already, consider hiring a tax professional that can make sure you are taking advantage of all the deductions and credits that could be available for your situation.
5. Speaking of taxes, know the new tax numbers for 2023! Check out Important Financial Numbers for 2023 to review your tax rates for 2023, standard deductions, retirement plan limits, income limitations for IRA accounts, and more!
6. Max out your Health Savings Account. An HSA is a tax-efficient savings account to be used for medical expenses. An HSA is an amazing savings account that you are allowed to contribute to if you have a high-deductible health insurance plan. The best part is you don’t have to pay taxes on the money that you contribute to the account, you don’t pay taxes on the amount you withdraw from the account, AND you get tax-free growth on the assets within your HSA (yes, they can be invested and should be invested for growth). Do not touch these funds until your retirement years to get the most benefit from the tax-free growth.
7. Save for retirement and max out your contributions. If your employer offers you a retirement plan, check with your employer to determine the max amount that you can contribute every month to your plan. In addition, if you can contribute to an IRA account (check income limitations) then you can save an additional $6,500 in 2023 ($6,000 if over age 50) between a Roth and Traditional IRA. Every year is an opportunity to take full advantage of these awesome tax savings, so be sure to chat with your financial planner to see what retirement options are available for you.
8. Take a moment to review and plan for any major life events this year. Are your kids going to college? Are you getting married? Moving? Changing careers? Growing your family? All of these major life events can have a significant impact on your long-term financial plan. For instance, if you get married and decide to file your taxes jointly, your income may phase out of availability to contribute to this account. Be sure to alert your financial planner of any potential changes to your life in the new year.
9. Review the beneficiary on your retirement accounts, bank accounts, and other assets. Remove any beneficiaries from your retirement accounts if they didn’t get you a gift this holiday season. Totally joking😂! In all seriousness, take some time to review your beneficiaries to make sure they are accurate and up-to-date. Make sure you have beneficiaries on all of your checking and savings accounts as well.
10. Consider boosting that emergency fund. The rule of thumb for a good emergency fund is 3-6 months of expenses in easily accessible funds so that you can handle a loss of income for a short period of time. This could be due to a slow market, layoffs, sickness, disability, etc. Review your emergency fund needs by determining your monthly expenses (you can do this easily after you complete #2 on this list) and multiply it by 3 or more depending on how many months you would like to be able to live without an income. Additionally, you may need to increase your emergency fund with the rise in prices due to inflation, so continue to monitor how your expenses are changing.
Now that you have your financial goals supporting all of your other goals, I hope you have a magical new year and that 2023 is your best year yet💫!