With most of us hoping for better financial prospects in 2023, it’s important to acknowledge just how brutal 2022 was for Americans and their wallets. Not only did the stock market end the year significantly down, but cryptocurrencies largely tanked as well. Sky-high inflation also led the Federal Reserve to raise interest rates throughout the year, so borrowing money became much more expensive, too.
But, the past is the past, and there’s nothing any of us can do to change it. We can, however, take steps in the new year to invest more and spend less with the goal of building wealth.
With that in mind, you may be wondering what you can do to stick to your financial goals for 2023, whether you hope to pay down debt, learn how to invest, or spend less on things you don’t really care about.
Here are some tips from some of the top financial professionals out there today.
Make a List of Measurable Goals
Financial advisor David Edmisten of Next Phase Financial Planning says that reaching your financial goals becomes 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 of money per pay period, then follow through with that goal by filling out forms at work that facilitate this increase.
“Setting smaller, specific steps towards your goal that you can measure and accomplish frequently will help you keep momentum to ultimately achieve your goal,” says Edmisten.
CPA and financial coach Anne-Lyse Wealth of Dream of Legacy adds that breaking down big savings goals into smaller goals can also help. If you hope to save $5,000 toward your emergency fund in 2023, for example, dividing that amount by 12 months breaks this down to $417. This is an actual dollar figure to shoot for vs. simply hoping you set aside enough each month to reach your goal by the end of the year.
Breaking down goals this way helps make the goals more achievable, 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,” she said.
Automate Your Finances
You Need a Budget (YNAB) founder and bestselling author Jesse Mecham says that automating your finances is one the best ways to stick to your money resolutions in 2023 and beyond. Whether you’re trying to pay off debt, increase your retirement savings, or build an emergency fund, consider how automatic transfers or payments might help you stay on track.
Automation can help you reach your goals before the money even reaches your hands by eliminating the possibility that you spend those dollars on anything else, he says. Further, automation can also help you stick to a budget if you have one, mostly because automatically saving and “paying yourself first” ensures your money is actually going where you want it to each month.
According to Mecham, you can also consider downloading a budgeting app like YNAB that will track your spending without you having to manually tally up numbers in a confusing spreadsheet at the end of the month.
There are other budgeting apps you can consider as well, including Mint, EveryDollar, and Honeydue. These budgeting apps can help you keep track of where the money you work so hard to earn is going each month, and they can also help you figure out how much you can start automatically saving or investing going forward.
Focus On Getting Out of Debt
While hoping to save and invest more in 2023 is a noble goal, carrying high-interest debt could leave you in a position where you’re actively working against yourself month after month.
Florida financial advisor Chuck Czajka of Macro Money Concepts says that overspending is one of the biggest pitfalls you should watch out for as you try to stick to your new year goals. He points to a recent Bankrate survey that found more than a third of Americans are carrying credit card debt from month-to-month.
Czajka says that higher inflation has likely led more Americans to lean on credit to keep up with spending and everyday bills. However, if you can’t pay your credit card off at the end of each month, you shouldn’t be using credit.
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 down 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 anywhere from 12 to 21 months, although balance transfer fees apply.
“This will give you some time to make smaller payments while still making a bigger dent in the debt than you would otherwise,” she said.
Save Up Cash for Emergencies
Financial emergencies are one of the biggest challenges that prevent people from reaching their financial goals. After all, it’s much more difficult to save money and plan for the future when your world is suddenly turned upside down.
Financial analyst Richard Barrington of Credit Sesame says that saving up emergency funds may be crucial in 2023 if you want to reach your goals, particularly 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 of expenses that aren’t being allocated to pay for anything else.
“An emergency fund is a good way to have some money available to see you through a financial setback like a period of joblessness,” said Barrington.
“Otherwise, you may have to resort to borrowing, which only makes the problem worse by adding interest charges to your expenses.”
Don’t Let Small Mistakes Ruin Your Plans
Finally, Senior Financial Planning Education Consultant Emily Koochel, Ph.D. of eMoney Advisor says it’s important to reflect and set money goals. However, you should also remember that humans are never perfect, and that our behavior doesn’t always align with where we hope to be in the future.
“By declaring what is important to us first, and by paying attention to our behavior, we can start to notice our progress towards success, identify the gaps, and determine when our behavior falls short of our ideals,” she said.
With all this in mind, it’s also important to understand that everyone makes mistakes and to “give yourself some grace.” Ultimately, this means not giving up if you make a poor financial decision or a financial emergency leaves you falling short of your goals for a while.
“If you make a ‘bad’ financial decision, take time to realign and get back on track,” said Koochel.
“We always have room to grow and improve.”