January 2, 2023
At the start of the new year, people are looking for ways to improve their lives. They may make resolutions to lose weight or stop smoking. These are great, but what about financial resolutions?
The point of making a resolution is to improve behaviors and better one’s life.
If you are shackled by debt, you will not be able to live your best life – or achieve financial freedom.
Unfortunately, many Americans are not enjoying financial freedom. Many are feeling the opposite – financial oppression.
The State of Personal Finance in America 2022 found:
- One in three Americans said they are either struggling or in a crisis with their personal finances.
- When asked what their two biggest financial challenges were, 40% of Americans reported inflation was their most pressing challenge.
- 59% of Americans said they worry about their general finances daily (a 15% increase from 18 months ago), and about half have lost sleep in the last three months due to financial worries.
- More than half of Americans have less than $1,000 in savings.¹
Do these survey results resonate with you? If so, it may be time to make the following 10 financial resolutions for 2023.
#1 Commit to Paying Yourself First
The first step toward financial freedom is paying yourself first.
This means before you write the first check or pay the first bill, you pay into your savings and retirement accounts first.
Set up your 401(k) and IRA to automatically take savings out of your paycheck. Make sure this money is deposited before you pay for anything else.
#2 Stop Overspending and Start Saving
One of the most satisfying financial resolutions you can make is to stop overspending and start saving.
It’s encouraging to see your debt decrease as you stop overspending and see your savings rise as you take what you would have overspent and apply it to your savings.
One way to stick to this financial resolution is to create a clear budget that covers every budget item – including discretionary spending.
Once you have a budget, stick to it.
If this is a struggle for you, consider downloading the app PocketGuard. PocketGuard is a budgeting app designed to help overspenders cut back and meet financial resolutions.
#3 Create a Retirement Plan and Follow It
Most people know saving for retirement is important, and many have 401(k)s.
However, there are people who don’t know much beyond that. You may be one of those.
It’s time to get a crystal clear picture of what saving for retirement looks like for you. This will vary from one person to the next depending on your income, when you start saving, how much you contribute, and what you want your retirement lifestyle to look like.
All that goes to say, you need to create a retirement plan.
Consider the following questions:
- At what age do you want to retire?
- What do you want your retirement to look, feel, and be like?
- How much money will you need to have a fulfilling, comfortable retirement?
- How much do you need to save right now to ensure you will reach your goal?
Answering these questions helps get a plan in place.
Use our 401(k) calculator to see how much you may have at retirement with professional account management.
#4 Increase How Much You Contribute
2023 is a great year for your financial resolutions, including increasing your contributions. This is because the contribution limits have increased significantly, which means you may be able to catch up to your retirement goals.
Employees with 401(k)s, 403(b)s, most 457 plans, and federal Thrift Savings Plans can contribute up to $22,500 in 2023, an increase of $2,000 over 2022.
For those age 50 and older, the 401(k) catch-up contribution jumps from $6,500 to $7,500 in 2023, for a total of $30,000.
Individual retirement account contribution limits increase to $6,500 in 2023, up from $6,000. This applies to Roth IRAs as well. The catch-up contribution for people aged 50 and over remains the same additional $1,000.
[Get More Details Here: Big Increases to Retirement Plan Contribution Limits for 2023]
#5 Get Engaged with Your Retirement Accounts
Don’t make the mistake of simply enrolling in a 401(k) and just letting it sit there. You need to be engaged and know what is happening with your retirement savings.
That starts with opening your statements and reading them.
If you don’t know how to read your statement, check out this video, and we’ll walk you through it.
But it doesn’t stop there. Once you understand how to read your statements, consider other ways to potentially boost your savings.
One such way is rebalancing. Make a resolution to rebalance your account allocations throughout the year.
Another way is to make sure you have not left your old 401(k) behind at a previous job. It’s up to you to roll it over.
#6 Commit to Not Taking on More Debt
Financial resolution #2 was to stop overspending and start saving.
Financial resolution #6 goes along with it. In 2023, make it your goal not to take on any debt.
This means not paying with your credit card unless you know you can pay it off at the end of the month.
It also means not making the big purchase even when they offer 0% interest for 12 months unless you are positive you have the money in your budget to pay it off before you incur interest rates.
Better yet – make 2023 the year you pay off your debt and start living a debt-free life!
#7 Use Financial Apps and Tools
We often talk about all the different financial tools available today, but don’t let this information go in one ear and out the other.
In 2023, find tools that help you find financial freedom.
These may be apps that track your spending, such as Mint, or websites that make it easy for beginning investors, such as Stash.
Maybe this is the year you download a cashback browser extension, such as Ibotta, and use the money you earn from this browser extension to pay for Christmas presents in 2023.
#8 Boost Your Financial Knowledge
It’s never too late to learn something new.
One of the best financial resolutions you can make is to become more knowledgeable.
Finances can be overwhelming, and the inflation woes of 2022 have many people worried. Instead of sitting and wondering about the state of your finances, take control by learning.
Check out our complimentary 401(k) investing guide. Read blogs like this one. Watch videos. Listen to podcasts.
Subscribe and watch us on YouTube.
#9 Clean Up Your Credit
If your credit score isn’t where you want it to be, strive to raise it in 2023.
Request a copy of your credit report and make sure all the information is correct. Make every effort to pay down debt, pay bills on time, and not max out credit cards.
#10 Ask for Help When You Are Unsure or Have Questions
Whether or not you have ever worked with a financial advisor, it should be one of your financial resolutions for 2023.
If you already have a financial advisor, check in and see what changes need to be made to achieve financial freedom today and in the future.
If you don’t have a financial advisor, now is the time to find one.
It will be well worth your time to get third-party advice – especially when it comes to something as important as your future finances.
David Blanchett, former Head of Retirement, CFP, CFA at Morningstar reported that participants that received expert guidance had as much as 40% more income during retirement versus those who received no help at all.²
[Try our 401(k) calculator to see how professionally managed help may impact your 401(k) balance in retirement.]
401(k) Maneuver provides professional account management with the goal to help you grow and protect your 401(k).
Our goal is to increase your account performance over time, manage downside risk to minimize losses, and reduce fees that harm your account performance.
There are no time-consuming in-person meetings and nothing new to learn, and you don’t have to move your account.
Simply connect your account to our secure platform, and we regularly review and rebalance your account for you, when necessary. Check here to learn more about how it works.
If you have questions about your 401(k) or if you need help, we’re here for you. Click below to book a complimentary 15-minute 401(k) Strategy Session.
- David Blanchet, Morningstar Analyst 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”