Raleigh NC Financial Advisor: Jump-Start Your 2023 Financial Wellness Plan
For many Americans, achieving financial well-being is a combination of both the mental and financial aspects of their lives. When it comes to money, having a stable financial life is the key to achieving a healthy balance of both mind and wallet. This includes having a steady income, having enough savings to cover unexpected expenses, managing debt responsibly, and having a budget that allows for savings and investing.
In addition, financial wellness also involves being aware of the various investment options available and making sure that the financial decisions being made are in line with one's goals and values. By taking steps to ensure financial wellness, individuals can be better equipped to make sound financial decisions, allowing them to achieve their long-term goals and live a more secure life.
In January, Financial Wellness Month, there are a few simple steps you can take to ensure that your financial well-being plan for 2023 stays on track. Here are three actions you can take to improve your financial health this month:
Contribute 1 Percent More to Your 401(k)
There is a good chance that you haven't changed your 401(k) contribution since you set it years ago. So, let's start there.
Increasing your contribution an additional 1 percent can potentially mean tens of thousands of dollars more in your retirement account when you are ready to retire. For a person who makes $100,000 per year, the difference between a 6 percent and 7 percent contribution rate after 30 years (assuming an annual growth rate of 5 percent) would be about $70,000.
Many financial advisors suggest contributing from 10 to 20 percent of your salary each year to your retirement fund. By increasing your contribution by 1 percent this year, you can begin the process of building up to that goal. So go ahead and increase your 401(k) contribution by an additional 1 percent this year (it won't hurt as much as you might think) and plan to do so again next year.
Save an Extra $50 This Month
Saving is a habit. The more you save, the better you get at it. And like most things in life, you need to stretch yourself every now and then to get even better at it.
This month, try saving $50 more than you usually do (or more if you can, less if you can't). It may not sound like a lot, but it does a couple of things.
First, it provides a stretch goal that you can work toward meeting. If you can save an additional $50 in January — a month when the holiday bills start to arrive — it can help build your financial confidence even more.
Second, you begin to "pad" your savings. This is particularly important when an unexpected expense strikes, like a car repair (winter months wreak havoc on cars). It could be that little extra you need in the end to keep you whole.
Saving an extra $50 this month can help increase your financial confidence, pad your savings now, and, just as important, build momentum. If you can save an extra $50 this month, what can you do next month?
Pay Off Your Smallest Debt as Soon as Possible
Debt is insidious. All too often, a small debt can quietly become a large debt if not addressed in a timely manner. And when that happens, your best-laid financial plans can become derailed.
So, this month, inventory your current debt and find the smallest one you have. It could be the couple of hundred dollars you put on the department store credit card you just opened to get holiday discounts. Or maybe it's that small debt you've had for months that just never gets any smaller (even though you pay something every month).
Find that one small debt you know you can tackle in the next few months and get it eliminated. We know that budgets may be tight right now, but once you calculate how much you need to pay each month to get rid of that debt, look for unnecessary expenses you can remove from your budget. Use those monies to pay off this debt. This way, you get twice the bang for your buck: You eliminate debt (and its associated interest) and get rid of expenses you don't need.
Bottom Line
Achieving financial wellness is a lifelong journey that requires dedication and commitment to achieve lasting results. Starting the year off with a few small but meaningful adjustments to your financial plan can set you up for success over the long-term and help you to make progress towards your financial goals. It could be something as simple as setting a budget for yourself, cutting out unnecessary spending, or creating an emergency fund. These small steps can have an immense impact on your financial well-being and can provide you with the motivation you need to stick to your plan and reach your goals.
Sources:
https://blog.massmutual.com/post/2023-financial-wellness-plan
Disclosures:
This site may contain links to articles or other information that may be on a third-party website. Advisory Services Network, LLC is not responsible for and does not control, adopt, or endorse any content contained on any third-party website.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.
