Going to the gym? Reading more? Taking that long-awaited vacation? Everybody wants the new year to start well, and personal financial goals are no different. Here are three of the most important actions to take now (and at the start of every year) that we recommend:
Update your budget
Begin by making a list of any significant expenses you anticipate for the coming year, including a possible move, marriage or pricey vacation. You want to factor these costs into your budget and be prepared for them. Similarly, if you’re making a career change or expecting a raise at work, you’ll want your new budget to reflect it. To understand how much you spend, look back at your purchases over the last couple of months.
Review emergency savings
The amount of money people need to be stowed away varies, and the start of the year is the perfect time to assess how much is best for your household. To begin, you’ll typically want to calculate your key monthly expenses, including rent, food and utilities, and pet care, and then decide on a number of months you want the account to be able to cover should you lose your job. In addition, that money would also come in handy for a one-time emergency such as an unexpected car repair or a medical bill. While conventional wisdom says six months’ worth is the ideal savings amount, this number can vary by unique household situations.
Make sure you’re on track for retirement
The start of a new year is the best time to check in with your retirement savings goals and to make any needed changes. Some people may be able to take advantage of the increased annual contribution limits, in 2023, for 401(k) workplace retirement plans ($22,500) and individual retirement accounts ($6,500). Remember, even a small increase in your saving rate can make a huge difference over the long term.
Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice. Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.