2022 was an uncertain year financially and economically. But now that it’s almost over, it’s time to prepare for 2023. Of course, no one can be certain about what the future holds, but getting on top of your finances now can make you feel much more secure regardless of what 2023 brings. This article will dive into a few tips to help you stay on top of your finances as we head into 2023.
1. Create a budget
Budgeting is one of the most effective moves to manage your finances in 2023 because it helps you see how much money you’re spending. It enables you to cut unnecessary spending, like unused subscription services or small miscellaneous expenses. Once you’ve cleaned up your expenses, your budget can help you build sustainable spending habits that help you live below your means to avoid debt and start or increase your savings.
2. Get a life insurance policy
According to Forbes, at least 52 % of all Americans have some form of life insurance. Life insurance protects your loved ones should you pass away early. It pays a significant death benefit that can replace your income and help them pay off debts. Here are a few life insurance policy types to consider:
Term life insurance
Term life insurance is a temporary policy that covers you for a fixed period. Many term life policies last 10 to 30 years. If your policy expires, you’ll have to renew or buy a new policy to continue your coverage. In exchange, however, term life insurance premiums are inexpensive compared to the coverage you receive.
Simplified issue life insurance
Simplified issue life insurance is a type of small permanent life insurance with no medical exam. You only have to answer a few questions to apply. The death benefit is small, but premiums are low-cost, and coverage lasts for life. It also comes with a cash value growth component that saves part of each premium payment and grows tax-deferred at fixed interest. As this policy grows, you can eventually borrow against it or withdraw from it. Surrendering your policy also lets you get the cash value minus surrender charges.
Universal life insurance
Universal life insurance offers lifetime coverage and a cash value growth component that grows based on current interest rates. With this type of policy, you can adjust your premiums and death benefit as needed. You may have to complete another medical exam if you request a death benefit increase. Reducing the death benefit allows you to cut your premiums. Additionally, universal life insurance policyholders can pay some or all of their premiums with their cash value once it grows large enough.
3. Set a monthly savings goal
Slow and steady saving is the key to hitting your long-term financial goals. Set some savings goals with concrete numbers, so you know what to aim for and determine when you want to reach these goals.
Then, work backward to see how much you must save each month to reach those goals in that timeframe. Set this amount aside each month. After you create a budget and clean out unnecessary expenses, this should be easier since you’ll have some extra money left over.
4. Consider a financial advisor
As you grow and develop your financial situation, staying on top of it can become stressful. That’s where a financial advisor can help. Financial advisors are experts in managing and optimizing your finances. Plus, getting their help saves you a lot of time trying to plan things yourself.
A financial advisor can help with many aspects of your finances:
- Planning for retirement
- Preparing for large purchases, like a home or car
- Creating a plan to pay off debt
- Saving for your child’s college
- Selecting investments that meet your goals
- Keeping you accountable when it comes to budgeting and spending
Get ahead on your finances in the new year
Getting ahead on your 2023 finances starts with some planning now. First, create a budget. Use that budget to cut down any unnecessary spending and save money, then do your best to follow that budget each month.
Next, get a life insurance policy. Determine which type works best for you, then shop for multiple quotes to find the best rates. After that, write down some savings goals and set aside a fixed portion of your monthly income for those goals.
You can work on these alone or with a financial advisor. Along with these goals, an advisor can help you plan for retirement, select and manage your investments, and more. So follow these tips, and you’ll feel much better financially as we move toward 2023.
