Finance

Make 2023 your best financial year yet with this 3-step checklist

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Goal setting and planning are the cornerstones of financial success.


Key points

  • The first step is to review your financial goals so you know what to focus on this year.
  • A great way to ensure you stay on track financially is to create a budget and net worth statement.
  • A financial plan will help you achieve your financial goals and track your progress.

The start of a new year is the perfect time to reset and take control of your finances. Whether you’re just starting out in your career, or have been in the game for a while, everyone should ask themselves three important questions about their finances.

  1. Where do I want to go?
  2. where am i now
  3. How will I get there?

Following this checklist can help you answer these questions and make 2023 your best financial year yet.

1. Set your financial goals

Setting your financial goals answers the first question. Without first establishing your financial goals, you will have nothing to work towards or focus on. Your financial goals help give you a sense of direction and motivation when things get tough. Take some time to write them down and post them somewhere easy to see.

You can even divide them into short, medium and long term. Long-term goals may be to retire at a certain age; a medium-term goal to save for a home; and a short-term goal may be to save enough for your emergency fund. Make your goals SMART (specific, measurable, achievable, relevant, time-based) and share your goals with others to help hold you accountable.

2. Create a budget and net worth report

This answers the second question: “Where are you now?” As a GPS tracker, you need to know exactly where you are right now to know the way to your destination. Creating a budget and net worth statement isn’t as daunting as it sounds. In fact, it’s one of the most important steps you can take when planning your financial future.

A budget helps you track your income and expenses so you know exactly where your money is going each month. It also allows you to plan ahead and determine how much money you want to save each month. Your statement of net worth is a list of your assets (cash, investments, property, etc.) and your liabilities (credit card debt, loans, mortgages, etc.).

Once you have a clear picture of your finances, it will be easier to make smart decisions about your spending habits and which liabilities to cut so you can reach your financial goals.

3. Create a financial plan

Now that you know where you want to go and where you currently stand financially, you can create a financial strategy and plan to get there. Let’s say you want to retire at age 50 and live on $50,000 a year (your goal). If you are currently 30 years old and have just paid off your education, but have little savings (budget and net worth), how much should you save? The answer will depend on a variety of factors, but using the 4% retirement rule and assuming a 10% annual return, you’ll need to save about $1,600 per month (how you’re going to get there) to reach your goal. Can’t afford it? Then you may need to adjust your goals. That’s why knowing your budget and net worth is so important!

Saving money should be at the top of everyone’s list when it comes to their financial future. It would start formation of a fund for emergency situations. It is always good to have some money saved for unexpected expenses or emergencies that arise. Next, work on creating long-term savings goals and making your retirement accounts. You should also consider setting aside extra funds each month specifically for big purchases like cars, vacations, or home renovations so that those items don’t become too much of a financial burden.

Any financial plan will need to address paying off debt as soon as possible. Credit cards, car payments, and other debts all add up quickly if not taken care of right away. The sooner they are paid off, the more money you will have available each month to save. Consider consolidating high-interest debts into one lower-interest loan so it’s easier to keep track of payments and manage your overall debt level.

As part of your financial plan, don’t forget to look at your insurance. Do you have enough life insurance, home insurance, and other forms of coverage? Do you need a will or estate plan for your beneficiaries? Addressing these issues is also an important aspect of your plan and will help you gain greater peace of mind.

Small changes now can lead to big results later. This checklist provides just a few simple steps that anyone can take today to create a secure financial future for themselves. Your plan will help you track your progress toward your goals. So why wait? Start taking control of your finances now and set yourself up for success in 2023. With this checklist in hand, there’s nothing stopping you from achieving your financial goals this year!

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