As many of us hope for a better financial outlook in 2023, it’s important to recognize just how rough 2022 was for Americans and their wallets. Not only was the stock market down significantly for the year, but cryptocurrencies were down a lot too. Sky-high inflation also forced the Federal Reserve to raise interest rates throughout the year, so it also became much more expensive to borrow.
But the past is the past and there is nothing any of us can do to change it. However, we can take steps in the new year to invest more and spend less to build wealth.
With that in mind, you might be wondering what you can do to stick to your 2023 financial goals, whether you’re hoping to pay off debt, learn how to invest, or spend less on things you don’t really care about. :
Here are some tips from some of the best financial professionals out there today.
Make a list of measurable goals
Financial advisor David Edmisten of Next Phase Financial Planning says that achieving your financial goals is easier when you make each step of your strategy specific and measurable. For example, saying you want to save more money for retirement in 2023 isn’t specific enough. Instead, you should plan to increase your 401(k) contributions by a certain amount for the pay period, then track that goal by filling out forms at work that contribute to that increase.
“Setting smaller, specific steps toward your goal that you can measure and accomplish frequently will help you maintain momentum so that you eventually reach your goal,” says Edmisten.
CPA and financial coach Anne-Lise Wealth of Dream of Legacy adds that breaking big savings goals into smaller goals can also help. If you’re hoping to save $5,000 for your emergency fund, for example, dividing that amount over 12 months would come to $417. This is a real dollar figure to shoot for vs. just hoping you’ll put enough aside each month to meet your goal by the end of the year.
Breaking down goals in this way helps make goals more attainable, which keeps you motivated. Not only that, but people tend to lose motivation when the goal is too big.
“With this strategy, you have a sense of accomplishment along the way and a reward for good behavior that helps keep you on track,” he said.
Automate your finances
Jesse Meacham, founder of You Need a Budget (YNAB) and bestselling author, says that automating your finances is one of the best ways to stick to your money resolutions in 2023 and beyond. Whether you’re trying to pay off debt, boost your retirement savings, or build an emergency fund, consider how automatic transfers or payments can help you stay on track.
He says automation can help you achieve your goals before the money even reaches your hands, eliminating the possibility of spending those dollars on anything else. What’s more, automation can also help you stick to a budget if you have one, mainly because saving automatically and “paying yourself first” ensures that your money actually goes where you want it to each month.
According to Mecham, you can also consider downloading a budgeting app like YNAB to track your expenses without having to manually calculate the numbers in a confusing spreadsheet at the end of the month.
There are other budgeting apps to consider as well, including Mint, EveryDollar, and Honeydue. These budgeting apps can help you keep track of where your hard-earned money is going each month, and they can also help you figure out how much you can automatically start saving or investing later.
Focus on getting out of debt
While hoping to save and invest more in 2023 is a noble goal, carrying high-interest debt can leave you in a position where you’re actively working against yourself month after month.
Florida financial advisor Chuck Chayka of Macro Money Concepts says overspending is one of the biggest pitfalls to watch out for when trying to stick to your New Year’s goals. He points to a recent Bankrate survey that found more than a third of Americans carry month-to-month credit card debt.
Chaika says higher inflation has likely forced more Americans to rely on credit to keep up with expenses and day-to-day bills. However, if you can’t pay off your credit card at the end of each month, you shouldn’t use a loan.
If you want to get out of debt, you can use any number of strategies to do so, including a financial program like YNAB. However, financial expert Andrea Woroch recommends paying off any high-interest debt you have with a balance transfer card.
Woroch adds that many cards in this niche offer 0% interest on balance transfers for 12 to 21 months, although balance transfer fees do apply.
“This will give you some time to make smaller payments, while also making more of a dent in the debt than you would otherwise,” he said.
Save cash for emergencies
Financial emergencies are one of the biggest challenges that prevent people from achieving their financial goals. After all, it’s much harder to save money and plan for the future when your world is suddenly turned upside down.
Financial analyst Richard Barrington of Credit Sesame says saving for an emergency could be crucial in 2023 if you want to reach your goals, especially since the Federal Reserve expects unemployment to rise this year.
Most experts agree that your emergency fund should ideally have at least three to six months worth of expenses that aren’t earmarked to pay for anything else.
“An emergency fund is a good way to have some money to see you through a financial setback like a period of unemployment,” Barrington said.
“Otherwise, you may end up having to resort to borrowing, which only adds to the problem by adding interest to your costs.”
Don’t let small mistakes ruin your plans
Finally, Senior Financial Planning Education Consultant Emily Kuschel, Ph.D. eMoney Advisor says it’s important to reflect and set money goals. However, you must also remember that people are never perfect and that our behavior does not always align with where we hope to be in the future.
“By declaring in advance what is important to us and paying attention to our behavior, we can begin to notice our progress toward success, identify gaps, and determine when our behavior is not in line with our ideals,” she said.
With all of this in mind, it’s also important to understand that everyone makes mistakes and “give yourself grace.” Ultimately, this means not giving up if you make a bad financial decision or in a financial emergency you don’t reach your goals for a while.
“If you make a ‘bad’ financial decision, take the time to regroup and get back on track,” Kuschel says.
“We always have room to grow and improve.”