How to Prepare Financially for the New Year

2023 is just around the corner, and it’s time to start preparing for the new year financially, not just plan new year’s resolutions.

One way to make sure you’re ready for anything life throws your way is by having an emergency fund — money that you can use in cases of unexpected expenses or income losses. But how much money do you need to save? And where should you even begin if you want to build an emergency fund?

Financially preparing for 2023 with an emergency fund

First things first, calculating how much money you need in your emergency funds involves more than just guessing a round number like $1,000 or $5,000. Instead, experts recommend aiming to cover at least three months worth of expenses. To do this, tally up all your necessary expenses (like housing costs and food) and then multiply it by three. That’s your new money goal for the year!

Now, when you have a number in mind, it’s time to start saving money. If your salary allows, set aside money each month from your paycheck and put it into an emergency fund account that you don’t touch. You can also look for ways to make extra money on the side to supplement your savings — whether it’s selling unwanted items or picking up a freelance gig. Every penny counts!

And finally, the best way to prepare for 2023 is by investing in yourself now — establish the right accounts, create a budget plan, pay off any debt, and actively search for ways to increase your income opportunities. You’ll thank yourself later when life throws you a twist!

Speaking of the right accounts..

Opening the right accounts in 2023

Checking accounts are a great place to begin; they provide easy access to money, and allow you to pay bills and store money safely. High-yield savings accounts help you earn more on the money that’s already in your pocket. Brokerage accounts let you invest easily, while retirement accounts like IRAs can help ensure long-term security.

Once you’ve got the right money accounts, it’s time to set financial goals and create actionable plans that help you reach them. Whether you want to improve your credit score, save money for a house or vacation, or simply reduce debt—now is the time to make a plan that helps get you closer to where you want to be.

Setting up a 2023 Budget

With just a few simple steps, 2023 can be your most money-savvy year yet and the new year is a great time to get your money to start achieving your financial goals. Setting up a budget is essential to getting financially prepared, and it doesn’t have to be complicated or overwhelming.

For starters, you could use a money coaching app like Nav.it to categorize your transactions and plan your spending once you connect your accounts. You’ll start with an automated budget that you’ll customize.

But if you want to go the manual route for 2023…

Here’s how to set up a basic budget to prepare for the new year:

1. Calculate your take-home pay

That means subtracting taxes and other deductions from your gross income (your total wages before any money comes out). Knowing how much money you actually have coming into your household will help you plan for expenses more accurately.

Make sure you’re taking advantage of your employee benefits

  • Make sure you understand your employee health insurance plan – including copays, deductibles, out-of-pocket maximums, and other important details. These can help reduce unexpected costs related to medical bills throughout the year.
  • Consider any additional voluntary benefits that may be available to you through work, such as accident coverage or life insurance policies. You may find that opting into these plans could save money in the long run.
  • Take advantage of any money-saving workplace perks, like discounts for gym memberships or prepaid childcare services. These can help you achieve your financial goals without breaking the bank!
  • Revisit your retirement plan contributions and make sure they are in line with what you want to save for the future. If your employer offers a matching program, be sure to take full advantage of that money!

By taking steps now to review your employee benefits, money will be less of a worry throughout 2023.

In this image, a woman is using a hand fan, while battling rising utility prices.

2. Estimate monthly expenses

List all of your fixed costs such as rent, utilities, car payments, etc. Then add in your variable costs such as food, entertainment, and other discretionary expenses.

3. Set money aside for savings

After expenses are accounted for, make sure you have money set aside each month to build a cushion and save for long-term goals like retirement or a down payment on a house.

4. Track your spending

Keeping track of where your money is going will help you identify areas to save money and ensure that you’re staying on budget.

Once you’ve set up the basics of your budget, start thinking about what financial goals you want to accomplish this year! With some planning and discipline, 2023 can be the year when you get financially prepared and start achieving all of your money goals.

Prepare Financially for the New Year by Identifying and Planning for your Goals

Start by identifying your financial goals for 2023. It could be anything from buying a new car or house to saving money for retirement. Once you know what you’re working towards, create a list of action items to help you get there. Consider budgeting strategies to help you save money toward those goals, like cutting down on expenses or setting aside money each month in a savings account.

Next, ensure you stay on track with your plan by setting money milestones and deadlines. Track your progress regularly and celebrate when you reach each money milestone!

Finally, if money is tight or there’s an unexpected expense slowing down your progress, don’t get discouraged. Take a step back and reevaluate your plan to find ways to adjust it so that it still works for you.

Creating a plan to accomplish your financial goals in 2023 may seem overwhelming initially, but it can be easily achievable with the right strategy and dedication!

Related Reads:

How to Stick to Your Financial Resolutions Once and For All

Top 10 Financial Resolutions for 2023

Resolution: Financial Well-being

A Financial New Year’s Resolution: A Success Story

New Year’s Resolution Guide to Budgeting

How the Nav.it money App Helps with New Years Resolutions

20 Money Goals for the New Year

Turning New Year’s Resolutions into Daily Money Habits

Things You Can Do to Have a Better Richer New Year

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