We’ve reached the beginning of 2023, and with any new year comes the responsibility of re-evaluating your financial health and setting new (or revisiting old) goals for the rest of the year. It is crucial to set time aside to make sure you are planning your finances for the new year. Did you set financial objectives at the beginning of 2022? If so, have you looked back at them to see if you achieved what you had hoped?
Now is the perfect time to get a jumpstart on revisiting your financial goals, budget, debt, and investments, and here’s a list of things to help you get started.
Reassess Your Budget
A well-defined budget is one of the pillars of maintaining good financial health. It’s essentially a jumping-off point for determining which of your financial goals are the highest priority, which expenses are essential and which are expendable, and where your money is most effectively allocated. It’s a good idea to revisit your budget every year (if not more often) so you have a strong foundation of financial knowledge before diving into your investments, debt repayment, and other priorities. To budget smartly, consider planning your finances for the new year and factors such as everyday expenses, savings and retirement funds, rent or mortgage payments, car payments and vehicle registration, groceries and gas, and entertainment.
Double Check Your Emergency Fund
Especially during a time of market volatility, inflation, and rising interest rates, it’s always a smart idea to re-evaluate how much you are putting away into an emergency savings fund. Most experts recommend setting aside roughly three to six months’ worth of savings in the event that you or a family member becomes unemployed or experiences an unexpected life-changing incident. Having these funds available can also help avoid the need to liquidate portfolio assets at low prices.
Pay Off Any Debt You Can
Did you recently receive a raise or a year-end bonus? You might want to consider putting some of that extra income towards any outstanding debts you have, whether that’s credit card debt, personal loans, mortgage payments, etc. If you can contribute more principal toward your payments, you can earn risk-free returns on your interest rates and cut down the repayment period.
You could also consider consolidating debt to exchange variable interest rates on multiple loans or lines of credit for a lower rate on a single, consolidated loan. If you are interested in debt consolidation, it may be a good idea to talk to a financial advisor to strategize the right options for you.
Re-evaluate Your Investments
The stock market is always changing, and it’s wise to regularly look at how your investments are performing. Sector performance goes up and down, and it’s likely the ones that performed best or worst last year won’t see a repeat performance. Rebalancing your portfolio allows you to change the weightings of your assets and minimize risk. This is another opportunity where consulting a financial advisor can come in handy.
Review Your Credit Report
Ultimately, you should be checking your credit report more often than once a year, but if you haven’t in a while, now is a great time to make it a financial “resolution” for the new year. Keeping a close eye on your credit report allows you to scan for any errors, repair any damage if possible, and determine ways to effectively raise your score. You are entitled to three free credit reports every year through the major credit bureaus, which means three free opportunities to check throughout the year. A poor credit report can significantly impact your ability to secure loans, cause you to pay higher interest rates, and reduce your disposable income.
If financial planning for 2023 has you in over your head, don’t stress! The expert team at Republic Bank has you covered when planning your finances for the new year. We partner with Ameriprise Financial Institutions Group for on-site financial planning, comprehensive investment solutions, and convenient digital capabilities. Our financial advisors and bankers are ready to help you make 2023 your best financial year yet. Reach out to us today at 800-526-9127.