New Year’s resolutions can be notoriously short-lived. But, while there’s little harm done for many types of resolutions that don’t last, financial plans are a different story. In fact, the ability to plan now and stick to the plan throughout the year can make a significant difference in how you’ll look back at 2023 in almost twelve months. So, here are just a few things to consider as potential resolutions while we’re still in the first week of January.
Pay Off High-Interest Debt
As interest rates crept up in 2022,1 it’s likely you started paying more attention to any debt you might have been holding already—and reconsidering taking on more debt for major purchases. Now is a good time to review your debt scenario and set goals for paying off debt, especially debt that comes with high or potentially high interest rates. While compounding is considered almost a magic way to increase wealth, the reverse is true with mounting debt. So, it’s best to nip high-interest debt in the bud, and what better time for this than the beginning of the year?
Revisit Your Just-in-case Savings
Creating or maintaining an emergency fund provides a good hedge against troubles from unexpected expenses—especially if they’re sizable. Medical care in particular may go well beyond your insurance coverage. On the bright side, maybe a son or daughter’s (or even grandson’s or granddaughter’s) romance will magically turn into a wedding. Be prepared!
The other type of “just in case” is when the markets refuse to go where you’d like them to. This is exactly when having a strong cash position can help prevent selling off when holding might turn out to be better in the long run.
One effect of the Fed’s ratcheting up of interest rates is the return of savings accounts that might actually deliver something resembling a yield. Of course, your financial advisor will be helpful in deciding where to keep your savings so they’re working to your advantage based on your timing and needs.
Review Your 401(k) Strategy
It’s always a good idea to stay on top of your 401(k) account or accounts. With today’s market as active as it is, the set-it-and-forget-it approach is probably not going to offer the best results.
Evolving technologies have made it possible for financial advisors to help you manage your 401(k) accounts. They’re considered “held away” accounts. You may want to consider asking your advisor if they offer this service.
Talk with Your Advisor
As Family Wealth Advisors, we really like it when clients call us. Yes, we’re numbers people, but we’re also people people. So, one resolution we recommend is to reach out to your financial advisor. It will be a good opportunity to discuss recent changes in your life that impact your financial situation and might suggest adjustments to your financial plans. Another good topic: long-term goals that should be planned for in ways that differ from short-term goals.
Eating well, exercising, and keeping mentally active will all add up to better health throughout the year. The better you feel, the more you’ll be able to enjoy the benefits of following all the other financial resolutions we’ve just talked about for 2023.
It’s always a smart idea to write down any resolutions you make, especially those goals that will impact your financial wellbeing. Even better, connect with your financial advisor and tax professional to ensure that your goals for this year align with your long-term goals for years to come. And, if you haven’t heard it from us already in 2023, Happy New Year!
Disclosure: This information is for educational and informative purposes and shall not be considered a specific recommendation. Readers are advised to speak with their advisor at JL Bainbridge to determine their specific recommendations that meet their investment objectives and to review their portfolios. The material being provided is thought to be accurate. However, the information is compiled from multiple resources and may become outdated or otherwise rendered incorrect by new research or corrections without notice. J.L. Bainbridge & Co., Inc., is not a broker dealer and does not offer tax or legal advice. Please consult your tax or legal advisor for assistance regarding your individual situation. It should neither be assumed that future results will be as profitable or that a loss could not be incurred. For more information related to our firm, please see our disclosure brochures at jlbainbridge.com and https://adviserinfo.sec.gov/firm/summary/108058.