Tackle them early on for a financially successful year.
- The moves you make at the start of a new year could set you on a solid path.
- These specific tasks, such as setting a budget, assessing your emergency fund, and more will help you manage your income, grow your savings, and avoid losing needless interest to debt.
The beginning of a new year can read like a fresh start for a lot of people. And it’s a great time to pay close attention to your finances. After all, you probably have near- and long-term goals on your radar. And the savvier you are about managing your money, the more likely you’ll be to achieve them. With that in mind, here are the first five financial moves you should make once 2023 kicks into gear.
1. Set up a budget
Your income may have changed in 2023, and your expenses may have done the same. That’s why it’s important to set up a budget early on in the year. That way, you can see what bills you have to manage and make sure you’re not overspending in any individual expense category.
2. Assess your emergency fund
It’s always a good idea to have enough money in your savings account to cover at least three months’ worth of essential living expenses. The start of the year is a great time to look at your savings balance and crunch some numbers to make sure you can pay for those three months of bills. If not, it’ll be a wakeup call to carve out more room in your budget for savings purposes.
3. Map out a debt payoff plan
Maybe you racked up some debt during the holidays. Or maybe you were carrying a credit card balance before the holiday season began and you didn’t manage to pay it off in 2022. Now’s the time to figure out how you’ll tackle your debt so that ideally, it’s gone by the end of the year, if not sooner. That could mean looking at ways to consolidate your debt, like taking out a personal loan to pay off different credit card balances, or doing a balance transfer onto a new credit card.
4. Review your credit report
Your credit report paints a picture of how reliable a borrower you are. It’s a good idea to read that report carefully and address any issues that might lead lenders to believe they shouldn’t loan you money, such as a history of late payments. It’s also important to inspect your credit report for errors that could hurt your chances of getting approved for a loan. Credit report mistakes aren’t all that uncommon, and you’ll definitely want to address any errors you find.
5. Set up an automatic transfer to your IRA
Allocating money to retirement savings can be tricky when you have immediate bills to pay. It’s a great idea to put the process on autopilot. Many IRAs let you set up an automatic transfer so money lands in your retirement plan right off the bat each month. That’s money you won’t be tempted to spend, which could lead to a larger nest egg.
You may have a host of different financial tasks you’re hoping to tackle in the new year. But it’s a good idea to prioritize these five items once you’ve recovered from your New Year’s Eve celebration and are ready to take on 2023.
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