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Many Americans set goals for the new year that involve getting in better shape or cutting out bad habits, but one expert says to be sure not to ignore your financial health when planning your self-improvement.
David Ragland, CEO of IRC Wealth and a certified financial planner, provided FOX Business with a list of financial New Year's resolutions to help keep you on track for 2023.
Setting financial New Year’s resolutions can help keep your budget in check for 2023. (iStock / iStock) Budget
Ragland recommends reviewing or setting up a monthly spending budget as part of planning for 2023. He suggests reviewing where your money is going, using a three-month average to smooth out the peaks and valleys and seeking ways to get more bang for every buck.
Update your personal balance sheet
According to Ragland, January is an excellent time of year for folks to account for where they stand financially.
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"Spend time writing down your assets and debts so that you can see the progress you made in 2022, and to help you set goals for 2023," he suggests.
For anyone ending the year with credit card debt, Ragland recommends making a list of the amount owed and the interest rate on each card. Launch a plan to pay them off, focusing on the card with the highest interest rate first while making the minimum payments on other cards.
The financial adviser also suggests calling card companies and asking for a rate reduction on cards with high interest rates. If a company declines the rate reduction request, consider a balance transfer to a lower rate card.
Interest rates are on the rise, making it more important than ever to try to pay down any credit card debt. (iStock / iStock)
Those with a mortgage might want to make a plan to pay it off faster. Ragland suggests making bi-monthly payments to speed up the pay-down. Or, you could gradually add a little extra to each payment, starting with $50 to $100 per month and then increasing that by adding a few dollars each month to the extra payment amount.
Boost retirement contributions
The IRS has increased the annual 401(k) contribution limits for individuals in 2023 to $22,500 for those under 50 years old and to $30,000 for those older. Those increases apply to 403(b) and 456 plans, too.
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Individual Retirement Arrangements (IRA) limits will be higher as well, at $6,500 for those under 50 and $7,500 for people 50 and older.
Aim to max those out, if possible, to take advantage of the tax savings of these long-term investment plans. Did you receive a raise in the fourth quarter of 2022 or expect one in the near future? If so, consider using the increase in pay to get you closer to your retirement savings goals.
Consider meeting with your financial adviser to review your portfolio and make any appropriate changes for the new year. (iStock / iStock)
Be sure to review your employer's 401(k) match and try to contribute at least as much to the plan to reach that threshold.
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Ragland also suggests automating your savings.
"Smaller, more consistent saving amounts into retirement and after-tax investment accounts lead to big gains in the future," he says.
Take the time to analyze your investment portfolio and consider rebalancing it if you are "overweight" in some sectors. If you have an adviser, Ragland says, set up a meeting to review your progress and any changes that may be appropriate in the new year.
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