6 Ideas to take charge of your finances in 2023
Dec. 14, 2022 • 4 min read
What we'll cover
Money management strategies for the new year
Guidelines for approaching investments, saving and homebuying
How to improve your finances in 2023
From the cost of a box of crackers to interest rates, it can seem as if it’s all on the rise these days. Inflation has caused prices of everything from groceries to gas to skyrocket, and many are worried about the prospect of job loss as recession continues to loom large. While all these factors can make you feel like you have no control over your pocketbook, it’s still possible to take charge of your finances.
The turn of a calendar page and a new year is the ideal time to take a critical eye to your money and make strategic changes . In fact, with proper planning, you just might have your best financial year yet. Implement these tactics to make the most of your money in 2023.
Pump up your retirement funds
In 2023, the maximum amount you can contribute to your 401(k) will increase from $20,500 to $22,500. The contribution limit for Individual Retirement Accounts (IRAs) is increasing, too, up to $6,500 annually. Take advantage by increasing how much you set aside, if you can. Even if you don’t max out your accounts, every little bit counts, so challenge yourself to up your contribution.
Beyond a 401(k) and IRA, you can also explore alternative investing choices, such as real estate. If you’re eligible, a Health Savings Account (HSA) also allows you to set aside funds in a tax-advantaged account for qualified medical expenses.
Take advantage of lower stock prices
The upside to a falling stock market? More affordable investing. The S&P 500 is down more than 10% for the year, meaning the same stocks could cost less per share than they did a year ago. If you’re not yet investing for the long run, make it a priority in the new year.
If you already have a portfolio, take a close look at your current mix. Do you have a good combination of investments that matches your risk tolerance level? You should also review any investment fees you pay to ensure the expense is justified. Analyze your performance over the past year to see if it's in line with what you were hoping for. If you need more guidance, consider a robo advisor or working with a financial advisor.
Take a fresh look at your budget
Didn’t quite hit your budget goals in 2022? Don’t dwell on the negative. Use the new year as a fresh start. Amid inflation and a possible recession, having a good money management plan in place is more important than ever. Budgeting is not one size fits all, so the path toward success may be a matter of choosing a style that works better for you. Find out what motivates you, and don’t beat yourself up if you fall off-track. Tomorrow is a new day and another opportunity to recalibrate.
Supersize your savings
Savings account interest rates are at historic highs and are generally expected to continue rising in 2023, so it’s a great time to start stocking away cash. Utilize buckets in an Ally Online Savings Account to save toward specific goals like travel, an emergency fund or a new (or new to you) car. In tough economic times, you’ll be glad you have a nest egg to fall back on.
If you spent too much during the holidays, the new year is the perfect opportunity to find more balance. Just like you might be committing to a new exercise routine or a healthy eating habit
at this time of year, think about ways you can tighten your financial belt. Take stock of your savings to see if you’re in line with appropriate savings goals for your age . With a specific goal in mind, you might be more motivated to accomplish it.
Analyze home affordability
New year, new home? During the pandemic, home prices exploded, leading to bidding wars . Now, as interest rates have begun to rise, prices are not falling at quite the same pace. Prospective buyers may be wondering if purchasing a home really fits their budget right now. In this climate, it’s more important than ever to get a firm grasp on how much home you can afford . Remember that more goes into the cost of home ownership than just your monthly mortgage payment. Before you take the plunge, make sure you can comfortably manage the total expense. The good news is that home prices are expected to fall in the new year, and availability in homes on the market should increase as well.
Put mortgage rates into perspective
The recent rising interest rates can make prospective homebuyers wary, but it’s important to take a step back. Yes, rates have risen, but they’re still near historic lows. If buying a home is one of your goals, you should pursue it. Shop around to make sure you get the best mortgage rate possible.
Get financially fit in 2023
When January 1 rolls around, it’s the perfect time for new beginnings. No matter your current financial situation or goals, you can begin building a strategy for success to make this year the one where you master your money. Evaluate all areas of your financial health, and make a plan to make your dreams a reality.
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