With rising interest rates and increasing fears of a recession, people are leery of new investment opportunities. Facing uncertainty in the coming year, many people lack confidence in their financial plans or strategies. Thankfully, the new year brings with it new hope, and January is the perfect time to reassess the difficulties of the past 12 months, evaluating what worked and what didn’t, and turning those lessons into successes in the year to come. This article is not about focusing on high-risk investments; it is about exploring eight safe and fundamental investment strategies to work towards financial success this year.
How to Work Towards Financial Success in 2023
1. Create a Budget and Stick to It
Budgets are more often ideal scenarios than actionable plans. People typically take time out of the first month of every year to establish a financial plan, but those accounts and rules they set out with at the beginning of the year rarely, if ever, last more than a few months.
The problem with many first draft financial plans is they are rooted in idealism and not realism. Too many people try to cut out too much and too quickly. A spending habit is, at its core, a habit, meaning that it is not something you can alter rapidly.
Instead of trying to cut out every luxury and every want, try dialing back the spending. For example, instead of buying a fancy, expensive latte every day before work, cut it down to three or four days a week. You need to create new, and healthier, habits to work towards financial success.
Creating a realistic budget is about finding a balance between needs, wants, and savings. Your needs typically should take no more than 50% of your monthly income; wants, no more than 30%; and savings, at least 20%. Finding the right balance for your life will not occur overnight, but you can start making adjustments in January for a healthier fiscal year.
2. Seek Professional Financial Advice
It is okay to admit you do not have a knack for numbers. Too many people feel embarrassed to ask for financial guidance or help. The reality is that most people carry some form of debt, and many understand the challenges of saving for their future while still trying to survive in the present.
A financial planner or advisor can help you make heads or tails of your current financial position and how to work towards better financial success. They can walk you through your expenses, classifying each as needs or luxuries, and guide you through the process of retirement planning. While the financial process can seem a little overwhelming, you will learn more than you ever thought possible in the hands of a qualified professional.
3. Assess Your Portfolio
For those individuals who are a little more financially savvy, assessing your portfolio is an excellent idea at the beginning of the year. You can decide if your investments are too aggressive for the current economic climate or are not bold or risky enough. If you do not already have a broker or advisor, you might want to consider one now.
4. Reduce Account Fees
Throughout the year, it is not uncommon to collect new accounts or go after new investments. Some of these financial opportunities will include hidden fees, which might not have bothered you before but deserve consideration now. After having some experience with the account, you can determine whether the rewards balance the costs; if not, close the account.
5. Transition to a High-Interest Savings Account
Where do you currently stash your savings? Under the bed, in the freezer, or in a low-interest savings account? Many savvy investors neglect their poor savings account, leaving it to accrue only minimal cents on the dollar. Instead of wasting time and earning little, consider opening a high-yield account for more money with the same amount of time. The type of account will vary, but most will require a commitment period.
6. Use Your Flexible Spending Account Funds
Do you have a flexible spending account? Many people do, but they also neglect to use these accounts before the year is over, meaning they could lose that tax-free money forever. The flexible spending account is a particular account where you can place money to cover out-of-pocket medical and health care costs. Unfortunately, most arrangements do not permit money to stretch over from one year to the next, so you could lose it if you don’t use it.
7. Save for Retirement
Saving for retirement should be a priority for everyone. If you have a 401(k), contribute the maximum amount annually; if you have a Roth IRA, do the same. Also, always check the changes in contribution limits; the government reassesses these limits every year.
8. Buy Items on Sale or Discount
When it comes to buying wants or traveling, everyone should set aside an entertainment allowance. However, use that money wisely and only purchase items on sale or at a discounted price to maximize your buying power.
Are you ready for the new year? Get your financial house in order this January to build financial success for 2023. And if you need some help, consider using LoanConnect to find loans at reasonable rates, catered to your needs.