Financial Goals for the New Year

Many of us create a list of New Year’s resolutions to avoid making the same mistakes we made in the past year, and to promote positive change in the coming year. Finding ways to improve your finances should be among your top priorities for 2023. Here are some of the best ways to boost your financial health.

1. Evaluate expenses and establish a budget

You might think you know how much you spend every month, but if you start tracking your dollars, you may be surprised by what you are spending and on what. Use a budgeting app like EveryDollar, create a spreadsheet, or use whatever method works for you to document your monthly expenses. Rent or mortgage, car payment, and utilities are easy to track, but make sure you list everything else you spend money on, including clothing, restaurants, and entertainment. Once you have close approximations of your monthly expenses, decide if there are places you can cut back on. Then establish a reasonable budget to follow on a monthly basis.

2. Pay off high-interest debt

If you keep a balance on your credit cards each month, you are likely paying hefty fees. Create a plan to pay off more than the minimum due each month until you can pay them off completely. Consolidate your debt into your lowest interest card if possible. Ideally, you should aim to pay off your credit card each month. Eliminating high-interest debt is an integral step in establishing a healthy financial future.

3. Boost your emergency fund

Financial experts recommend having three to six months worth of expenses in an emergency fund. After establishing a monthly budget, you should know how much cushion you should have set aside in case of unforeseen emergencies. If you have little or no emergency fund, now is the time to set a line item in your monthly budget to allocate towards an emergency fund.

4. Save more

Saving more is often the number one financial resolution made each year. After you review your budget, determine how much you would like to save each month. This can be for a big purchase (like a new car), retirement, or an emergency fund. Automatically saving a set amount from each paycheck before you can allocate it in your budget will make it easier to pump up your savings account.

These goals may seem daunting at first, but going through each step can make it more manageable and less overwhelming. Remember that your first budget will likely be missing some items. But a missed budget is better than no budget, so keep at it no matter how many times you have to refine it. Once you have identified your goals, let us at Root Tax know so that we can help you work through your budget along the way.

If you’re ready to get started with your tax prep, please reach out to us here at Root Tax to schedule a time to discuss how we can best support your needs. the specifics.