Once again, it’s a new year. This is typically when people face the stark reality that they’ll have to make up for splurging during the holidays. If you’re one of these people, don’t despair. There are some simple tips and strategies you can adopt to refresh and reset your budget in 2023.
Before making those all-important decisions about what to cut from your 2023 budget, start by setting aside 5, 10, or even 15 percent of your bi-weekly pay towards an emergency account. Your bank, employer, or chosen investment firm can set this up. This amount comes off the top of your pay, so you never see it, never have to worry about spending it, and are forced to manage the rest of your money without it.
Save for Retirement
The first tip involves having money in case of an emergency. This second step is about saving for your retirement. If you must choose, make your emergency deposits lower than your retirement deposits. It doesn’t matter how you start or how much you set aside. All that matters is that you get this going. If you need help getting this started, then seek financial guidance. There are plenty of investment firms that can help you choose an investment you’re comfortable with.
Reduce Bad Debt
There is good debt, and then there is bad debt. Good debt includes buying appreciating assets like real estate. Owning a home, a cottage, or having a rental property are all examples of good debt. Bad debt includes overspending during the holidays or carrying a balance on high-interest credit cards.
Devote a portion of your budget to paying down your debt. Doing this will save you money in the long run. Credit card companies charge 15 to 25 percent or more in interest rates. You’ll be hard-pressed to find an investment that consistently provides a 25 percent or higher rate of return, so paying down credit card debt must be a priority in 2023.
Manage Debt Properly
No, this is not the same tip. Properly managing your debt means having a strategy. Do not make the all-too-common mistake of making minimum payments across multiple credit cards. If you have a high debt load, attack the smaller debts first. Continue making minimum payments on all cards, but eliminating the smaller debts first will help you build momentum and confidence.
Make Easy Decisions
During your budget process, you will have to decide what to cut. Make those decisions easier. Do you need all those streaming services? Do you really need to eat out at lunch every day? Small incremental changes have a significant impact on your financial well-being. People tend to confuse wants with needs when it comes to budgeting. The purpose isn’t to force you to go without; a successful budget means finding a balance and not living paycheck-to-paycheck.
Simple Wealth Management Tips
As a customer-centric investment firm, Delta Capital Management LLC and Sean Casterline focus on tailor-made wealth management and retirement planning. Our approach is to work with you to develop a customized solution you’re comfortable with and can follow through on.