With the 2023 new year out of the gate, many people are making resolutions and developing ways to improve life. Specifically, in the face of an uncertain economy, people from all demographics are looking for ways to improve their financial well-being.
A recent poll found that more than a third of the nation desired to improve their finances in the coming year. But improving financial health can be difficult if you don’t know where to start. That’s why we’ve curated the top financial planning tips for the new year to help your financial planning.
1. Create a Realistic Budget
It might be tempting to think of a budget as an annoying constraint. However, a realistic budget is simply a tool to have more control over your finances. Creating a plan based on your income will allow you to control your spending more efficiently.
Start by writing down your monthly take-home pay. Next, you’ll want to identify all of your monthly expenses. This includes bills, debts, and necessities such as gas, groceries, and discretionary spending. Subtract your expenses from your income for an overview of your spending habits.
Many people find it helpful to use one of several software programs to help your budgeting. Nerdwallet has a reasonably comprehensive list of budget apps, with reviews of each.
Rent is a necessary spending category, and the general recommendation is that your rent or mortgage should not exceed 30-35% of your monthly income. While it might be hard to adjust your housing expenses, you can tweak your budget in the other flexible spending areas, such as your grocery or eating-out limit.
2. Make a New Year Resolution for Financial Health
One of the most important financial planning tips for the new year is to make a New Year’s resolution around finances. Financial health is about feeling in control of your finances. If your financial affairs consume a constant negative space in your mind, you might benefit from a financial health checkup.
Don’t be discouraged if you do need to check in with your finances. In a time of high inflation rates, nearly every American household lives paycheck to paycheck. Budgeting and sticking to your new year financial goals are two remedies for optimal financial health. Make better financial health one of your 2023 resolutions, and stick with it through careful planning.
3. Plan for Large Purchases in Advance
Every household has common large purchase requirements, which seem to come at inconvenient times. Some of these expenses are considered needs and must be planned for. For example, replacing a broken furnace (or other appliance) is hard to prepare but necessary.
If you have large purchases in 2023, like holiday gifts, work those into step one, creating a budget. With your money allocated, you can calculate how much you’d need to save to pay for big purchases. Critical aspects of large budget purchases include:
- Time: If you know when the purchase will be needed, you can estimate a monthly savings projection.
- Shop Around: Shop around before you purchase big-ticket items so you can find the best deals. Certain items might also be seasonally cheaper.
- Plan for Uncontrollable Needs: Unexpected necessary purchases can come from a crisis. While working towards financial health, try to add a small amount to an emergency budget.
4. Evaluate Spending Habits for Meals
Food is one of the discretionary spending categories that has flexibility. While everyone requires adequate nutrition, is eating out a need or a want? The jury may still be out, as more than 75% of Americans eat out multiple times a week.
Still, whether you hit the drive-through or sit down at a restaurant, food can quickly consume a large portion of your budget. If you usually eat out several times a week, consider making 2023 the year to try more fast and easy recipes at home.
Whether you grocery shop once a month or on a weekly or bi-weekly basis, a meal plan can help improve your financial health. Write all your favorite meals down and meals that can be made in large batches and frozen. Ask for easy and cheap recipes from family and friends. Then prepare a grocery list for the recipe ingredients you’ll need to purchase.
5. Build Your Savings
Emergency savings recommendations vary, but many experts recommend aiming for at least 3-6 months of savings. However, if your current savings total is zero, saving even a few weeks, let alone a few months, worth of wages may seem overwhelming.
The key to starting savings is just to start where it’s possible. If your budget leaves you with extra cash, save as much as possible to begin saving. Economists recommend setting a starting goal of about $2,500. This can help purchase new tires, replace a broken appliance, or help with unexpected medical expenses.
6. Review Subscriptions
The building of that recommended savings amount may take time. To help you achieve the task, look at where your money currently goes. One area that is almost always a want rather a necessity is monthly subscriptions.
You can pay to access streaming services, play games, listen to music, or even get regular car washes. When you’re signed up for a handful of low-cost monthly subscriptions, those prices can add up quickly. 84% underestimate their monthly subscription costs, while the average total is $237.
Look at those expenses and see which are necessary, essential and can be eliminated.
7. Pay by Plastic and Reap Rewards
The age-old adage that “cash is king” may still be valid when discussing liquid assets versus investments; however, carrying around cash may not provide many advantages. Instead, consider using plastic for spending when you can.
There are several rewards and advantages to using plastic purchasing power. Many cards come with downloadable apps for your phone. These apps can serve as helpful budgeting tools to help you track expenses and provide a running balance. Plus, cards can sometimes come with valuable perks and benefits just for using them. For example, Juice Financial offers cardholders multiple included benefits that normally cost thousands annually, including a tier program that offers enhanced benefits as you use your card more often.
What financial planning tips for the new year will you start with?
Financial planning is a tool to help you control the behavior of your money. While certain expenses are set, many others offer more flexibility. Knowing where you put your hard earned money will help you mindfully manage how you use it in the future.
These seven financial planning tips for the new year are the basic stepping stones to elevating your financial health.
If you ever face an unexpected significant expense, you might wonder how to overcome that hurdle. Consider using the financial tools and benefits offered to Juice cardholders. With features like earned wage access, you can navigate the unexpected while continuing to work on financial health.
We make it easy for your employer to offer you early access payroll and flexible perks on reloadable debit cards backed by an easy-to-use app. Share the good news with your employer – and start getting paid how you want.