As we wrap up one year and prepare to head into the next, now is the time to reflect on how far you’ve progressed financially and plan ahead for where you’re going. It’s always a good idea to check in on the state of your finances heading into a new year; with so many unexpected changes, it’s even more important.
Following these financial health tips for 2023 and beyond will help to ensure you’re on the path to a prosperous new year and bright financial future.
1. Emergency Savings Check-Up
Over the last few years, we all saw an example of how quickly things can go south. Millions of families found themselves relying on emergency savings and others in dire need.
Take a fresh look at your emergency cash stash and make sure you have enough to weather whatever storms come your way. It’s always better to be safe than sorry, so if you don’t have at least 9 to 12 months in cash reserve, it’s time to make this a priority.
2. Clean Up Your Debt
Keeping consumer debt to a minimum makes smart financial sense. Not only is mounting debt expensive due to interest and fees, but it’s also taxing on your peace of mind.
If you have unwanted debt, now is the time to face it head-on. You may not be able to pay it all off at once, but you can get clear on what you owe and create a plan for making a dent in it over the coming year.
3. Check Your Credit
Keeping your credit in good shape is crucial to your financial health. Poor credit scores lead to missed financing opportunities, high-interest rates, higher insurance rates, and more. If you need to take out a home equity loan to pay for repairs, refinance to take advantage of low-interest rates, or buy a new car, your credit score matters.
Take some time now to review your credit history, check your credit report for fraudulent activity, consider closing credit cards you are no longer using, and schedule time on your calendar in 2023 to keep an eye on your credit activity monthly. With cybercrime on the rise, we are all more susceptible to theft and identity fraud.
4. Review Your Taxes
Did your income change in 2022? Whether you received a large refund or stimulus checks, collected unemployment insurance, secured a new job after a layoff, got a raise or retention bonus due to the staffing crunch, decided to stay home with the kids because of childcare shortages, or made a career change during “The Great Resignation,” it’s possible that you, like many Americans, have experienced a shift in income in 2022.
This means it’s probably time to review your taxes and withholdings and make adjustments as needed. While you’re at it, start gathering receipts and documentation to complete your returns on time and work with your accountant to make sure you are setting yourself up effectively for 2023.
5. Use Your FSA Funds
Every year, millions of Americans scramble to spend their flexible spending account (FSA) money at the end of the year. Setting the cash aside for the tax benefit is a smart financial move, but leaving it unspent is a far-too-common mistake.
It may be too late to schedule appointments, but you can find creative and useful ways to deplete your funds with FSA-eligible purchases or check to see if your employer offers a grace period. If you find using your FSA money to be a struggle every year, plan ahead now for spending it in 2023 or consider reducing your amount for the coming year. the
6. Boost Your Retirement Savings
Did you get a raise or bonus in 2022, or do you have extra cash in addition to your emergency savings on hand? If so, consider increasing your 401(k) contributions. In 2023, you can contribute up to $22,500, or if you’re 50 or older, up to an additional $7,500 in catch-up contributions. You may also consider contributing up to $6,500 in a Roth IRA, and an additional $1,000 if you’re 50 or older.
Keep in mind, you have until April 15, 2023, to make your contributions for 2022. But now is the time to work with your accountant and financial advisor to make a plan.
7. Review Your Investments
Do you need to make any adjustments to your investment portfolio? Pull your year-end investment statement and look carefully at how your portfolio performed overall as well as individual returns.
It might be time to make some adjustments, sales, and reinvestments. Be sure to work with a trusted financial advisor to help you navigate these moves in a savvy and tax-efficient way.
8. Prioritize Estate Planning and End-of-Life Decisions
We all know our time will come to an end one day, but many people continue to put off important decisions about end-of-life and estate planning until it’s too late. Unexpected losses over the past two years have been a wake-up call for many families.
If you’re yet to get your affairs in order, make it a priority now to put a health care proxy and financial power of attorney in place, draft a last will and testament, get sufficient disability and life insurance, and get all the pieces of your estate plan in order by the end of 2022 or January at the latest. The reality is, none of us can afford to wait any longer.
Have a Happy, Prosperous New Year
Taking care of your financial health has far-reaching effects on your life. When your money worries are minimized, you are better able to create financial security for yourself and your family and enjoy the peace of mind that comes with it. Following these financial health tips for 2023 will help you have a happy and prosperous new year and beyond.
The Hatlestad Group is an independent wealth management firm based in Edina, Minnesota, primarily serving successful head-of-household women, late-career executives, and pre-retirees. With a tailored approach to fee-only comprehensive wealth management, they empower clients to live out their next chapter with vision, wisdom, and resources, creating a purposeful and meaningful future. They can be reached by phone at (763) 259-3637, via email at info@thehatlestadgroup.com, or by visiting their website at thehatlestadgroup.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.