Here are 3 money moves you should make at the start of the new year

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New year, new you? Probably not.

One of the revelations likely to come in 2023 is that you are largely the same person you were last year. You don’t suddenly like to run or take vitamins.

But sometimes it’s good when things don’t change, and the fact that many of the money moves we need to make stay the same year after year at least gives us more time to try to get them right.

Here are the three most important actions to take now (and at the start of every year), say financial experts:

1. Update your budget

“The New Year is an opportunity to reflect and start over,” said Brian Bender, head of Schwab’s Retirement Services. “That should include your financial plan.”

Bender recommends making a list of all the big expenses you expect in the coming year, including a possible move, marriage or expensive vacation.

You want to factor these costs into your budget and be prepared for them, he said. Similarly, if you’re changing careers or expecting a raise at work, you’ll want your new budget to reflect that.

To understand how much you’re spending, look back at your purchases over the past few months, said Kimberly Palmer, personal finance expert at NerdWallet.

“From there, you can make an estimate of where you want your money to go,” Palmer said.

One helpful rule of thumb, she added, is the 50/30/20 budget, which allocates “50% of your house payment to needs, 30% to wants, and 20% to savings and debt.

2. Review your emergency savings

Having solid emergency savings is one of the best ways to sleep soundly at night, said Cristina Guglielmetti, president of Future Perfect Planning in Brooklyn.

The amount of money people need varies, Guglielmetti said, and the beginning of the year is the perfect time to assess how much is best for you.

To start, you’ll usually want to calculate your key monthly expenses, including rent, food and utilities, and pet care, and then decide on the number of months you want the account to cover if you lose your job. (Of course, that money would also come in handy for one-time emergencies like an unexpected car repair or medical bill.)

“It could be as low as one to three months, especially if there are other savings pools to draw from, the ability to support family, or if one or both jobs are very stable,” Guglielmetti said. “Or it can go up to nine to 12 months if someone prefers that kind of security.”

How to build emergency savings

She recommends keeping the cash in a high-yield savings account. You’ll just want to make sure that any account you put your savings into is FDIC insured, meaning up to $250,000 of your deposit (per account holder, per bank) is protected against loss.

3. Make sure you’re on track for retirement

The start of a new year is the best time to check your retirement savings goals and make any necessary changes, experts say.

Some people may be able to take advantage of the increased annual plan contribution limits for 401(k) workplace retirement plans ($22,500) and individual retirement accounts ($6,500), Guglielmetti said.

Workers over the age of 50 may qualify to make additional contributions.

More from Personal Finance:
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Still, even a small increase in your savings rate can be powerful, said Rita Asaf, vice president of retirement at Fidelity Investments.

Asaf gave an example: For a 35-year-old earning $60,000 a year, increasing retirement savings contributions by 1% (or less than $12 a week), could generate an extra $110,000 in retirement, assuming an annual return of 7 %.

“If you have access to a 401(k) with a company match, try to save at least at the level of your company match,” Asaf added. “If you don’t, it’s like leaving free money on the table.”

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