January is an important month for many Americans. It is the month that most of us shake off the indulgence of the holiday season and make a fresh start. Whether that is eating better, getting more exercise, or smarter financial decisions, this is the month to start anew.
For many of us, this means creating a new financial plan for 2023. The last year has been another difficult one as inflation and the cost of living in the United States has been prohibitive for many families. It is more important than ever to have a solid financial plan in the year ahead. Financial Plan for 2023
Here are eight simple steps to success when creating a roadmap to better financial well-being in the year to come:
Reexamine Your Budget After the Holidays
Who has not gone a little overboard during the holiday season? Most of us do, and when that happens it can really cause problems for our budget in the months to follow.
Start fresh this year by examining your budget from the last month – as well as the last year – and finding any problems that you might have previously overlooked. Many people discover areas where they have dramatically strayed from their original financial plan by taking a closer look this way. Whether you planned your holiday spending down to the penny or simply swiped your card every time you saw something that looked festive and fun, a close examination in the early weeks of the new year can help you make a better plan for the months ahead!
Check Your Credit Score
What is your credit score? Many people do not think to check until they are preparing to make a major purchase – only to then find that their score is not what it needs to be to allow for this kind of purchase. To keep this from happening to you, check your score at least once annually to find out where you stand.
You might also want to request your annual credit report to find out what is weighing down your score. If you know what the problem is, you can work toward addressing it. Sometimes, it is as simple as requesting that an outdated or incorrect entry be removed.
Seek Better Loan Rates
If you have outstanding debt, it might be time to examine the loans you are repaying. If you are in good standing, you might be able to negotiate better terms or rates from your creditors.
For those who are struggling to stay on top of loan repayment, you might also qualify for a better or more affordable rate. Talk to your creditors as well as a bankruptcy attorney or other financial professional. They may be able to help you with negotiations and make paying off your loans or other bills easier. You will never know until you ask!
Set Up an Emergency Fund
As the last few years have taught us, an emergency can be much closer and more severe than you imagine. When the pandemic struck, many people were left temporarily or even permanently unemployed. Many others lost their jobs over the course of the next two years as international conflict, natural disasters, and manufacturing shortages caused chaos worldwide.
To prevent yourself and your family from being caught in the proverbial rain during these seasons of upheaval, create or continue to contribute to your emergency fund. You never know when it might become vitally important to keep your bills paid and food on your table!
Create a Spending Plan
What do you spend the most money on? For many of us, the answer is not what we expect. We assume that the majority of our expenditures come from bills – utilities, rent or mortgage payments, internet and phone service and food costs – but this may not be the case.
Determining where your money goes and comparing it to where you want it to go can be a major step toward creating a better financial future. How much you have to spend each month should be divided between important and necessary expenses – food, fuel, housing, etc. – before anything else. You might find that cutting out things like restaurant meals and coffee or unnecessary travel can help you save more than you think!
Establish Savings in Your Financial Plan
Additionally, you should have a plan for saving money. The money that is left over after your necessary expenses are paid should be allocated toward saving. Whether it means saving money for things like emergency or “rainy day” funds or putting money aside for education, travel, or just major purchases, saving is always a better use of those few extra dollars than spending frivolously.
Plan for Paying Off Debt
If you are like the millions of Americans who are struggling with student loan or other types of debt, you should prioritize working repayment into your financial plan. For some people, this may mean setting aside more money for this explicit purpose. For others, it may involve working with a bankruptcy attorney to establish a Chapter 13 bankruptcy plan. Your best solution might be something else entirely. Just be sure to create a plan that suits your budget and needs.
Partner with a Financial Planner or Other Expert
For those who do not feel comfortable making these changes or major decisions alone, it may be best to partner with a financial professional. For those making enough money to warrant the need for managing investments, multiple accounts, etc., you may find value in working with a financial planner.
However, even those who are dealing with financial difficulties can find professional guidance if they know where to look!
Van Horn Law Group, has experience in matters where money meets the law. For advice regarding everything from bankruptcy to making better financial decisions moving forward.