5 Financial Tips to Start 2023
The end of the year is often a time of reflection and planning. It’s time to take stock of your finances and identify areas of growth. Here are five things to give direction while reviewing your finances going into 2023.
The first and arguably most important action item is to review your financial goals from 2022. Were you successful? Where did you fall short? Why did you reach or miss a goal? This is a process we are all familiar with in regards to our personal goals. However, applying this process to your financial goals can have a compounding impact on your future. After reflecting on past goals, it’s time to look to the future. What would you like to accomplish in 2023? Is this the year to start your dream business? How much will you save? If the recent bear market has pushed some of your goals back, how can you combat this? Having a clear and precise direction for the year can be the difference for a successful year.
Many individuals receive a performance bonus at the end of the year. Have you strategically planned how you will use this bonus? This step purposely comes after goal setting. Knowing your goals for the coming year can provide a vision to identify an objective for this “extra” money. You could use this to pay off a large debt balance, invest for your future dream home or even provide for your children’s education. Whatever it is, identifying a purpose for this money can be the key to saving it from uninspiring compulsive expenses.
A few months ago, you should have gone through your company’s enrollment process to select your benefits for the coming year. During this process, you may have learned of new benefits your company provides. The beginning of the year is a time to return to this and ensure that you are taking full advantage of your benefits. In addition, it is important to review your 401(k) contributions and tax withholding for 2023. The 401(k) annual contribution limit will increase from $20,500 (2022) to $22,500 (2023) as well as the “catch up” contribution from $6,500 (2022) to $7,500 (2023). It is also important to review your tax withholding so you are not caught off guard during tax season for withholding too much or too little. Do this now so there are no surprises at the end of 2023.
Start the year by revisiting your budget. Review your monthly income compared to your fixed and variable expenses. Reexamining your budget now can be vital as you may have received a year-end raise and inflation numbers are still relatively high. You may have an opportunity to redirect income towards exciting goals or you may have to push goals back another year to ensure your family’s needs are met.
It is important to maintain a sufficient emergency fund should a crisis arise in the coming year. An emergency fund can protect your investments that are dedicated to future goals and dreams from “rainy days”. It can also reduce the need to rely on debt you could have avoided. The general rule-of-thumb is to set a side three to six months’ worth of living expense in a conservative and liquid account. If you had to dip into your emergency fund in the last year, you may need to prioritize rebuilding the account to the appropriate balance. More frequently, you’ll find that the account has grown much higher than needed and you may be able to redirect funds to your other goals.
Most of us are experienced “New Year’s Resolution” setters and forgetters. If you would like this year to be different, the team at Coign Capital Advisors would love to help. We specialize in helping individuals and families recognize where they are and what they need to do to reach their goals. Whether you need help reviewing and analyzing the five tips outlined above, or need an accountability partner, we would love to discuss how we can assist.
Coign Capital Advisors is a fee-based investment advisory firm based in Draper, Utah. Specializing in serving retirees, business owners, and entrepreneurs, the firm provides holistic wealth management that goes far beyond investment consulting and strives to attain suitable performance combined with solutions that make clients’ financial goals achievable. Led by J. Matthew Zundel, Robert P. Welch, M. Brandon Riley, Adam G. Lefler, Daniel R. Zundel and Courtland Adams clients receive a high level of service from a team with more than 100 years of combined experience. To learn more, visit www.coigncapital.com.
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