With high inflation and the possibility of a recession, it is more important than ever to protect your personal finances. If you’re not sure what to prioritize when it comes to financial planning, let these six money-saving tips guide how you set your financial goals to make 2023 a financially-focused year.
Focus On Saving More
Obviously, the first piece of advice is to save. Saving more money is one of the most common financial goals people set for themselves each year. However, with such a broad goal, it’s helpful to look at concrete ways to save money to help ensure you’ll be able to stick to it. Instead of just a vague goal, focus on specifics this time. To track your progress, divide a large goal into small ones with shorter deadlines and six-month milestones.
You can do this in a variety of ways, including setting up automatic transfers to a high-yield savings account and using a credit card that offers rewards such as cashback, miles, and points and reducing the number of unnecessary subscriptions.
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Keep an Eye on Your Credit
If you have poor credit (scores below 670), make it a priority to improve it by 2023. Paying your bills on time and in full (which may include setting up autopay), paying off debt, limiting the number of new accounts you open, and cutting back on spending are all ways to improve your credit score.
Use bill reminders and Online Bill Pay to stay on top of your debt. Simply plan out how much you want to pay and when you want to pay it. You can also receive payment reminders and e-Bills from payees that support electronic billing.
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Get Out of Debt
Pay off your debts. Over 60% of Americans have credit cards, and we collectively owe $17 billion. Debt often appears as a dark cloud over our heads, something we want to get rid of as quickly as possible. The greater your credit card debt, the higher the interest rate. This is money you could use to pay yourself.
The goal is to pay off your credit cards, but even contributing more than the minimum helps in the long run. If you want to get your debt under control by 2023, consolidating it on a low-interest loan or line of credit could be the solution.
Increase 401(k) Contribution
If your employer matches 401(k) contributions, make sure to take advantage of the match. Yes, there are a million reasons to put off saving for retirement, but there are numerous reasons to boost your contributions to your employer-sponsored 401(k) if you have the opportunity. This is free retirement money that you must not miss out on.
Before taxes are deducted, the amount you choose to contribute to your 401(k) is deducted from your paycheck. As a result, you pay taxes on a smaller portion of your earnings, and your overall tax rate may be lower.
Build an Emergency Fund
Financial experts recommend starting with a basic emergency fund before tackling any other financial goals. Many Americans do not have an emergency fund, and creating one will improve your overall wellness. Furthermore, you will not incur additional debt if an emergency expense arises, such as a car accident or medical bill. Having an emergency fund is a critical foundation for achieving the rest of your financial goals.
Start With Small Financial Goals
Every year, we all make a slew of resolutions that we follow for a few days before abandoning them. This time, let’s set more practical financial goals to build confidence. For example, start with a smaller goal, such as saving one month’s worth of living expenses or starting a small emergency fund. Once you’ve met that goal, set a new one of saving four months’ worth. and then work your way up. If at all possible, set aside 10 to 15% of your monthly income for savings.