How To Be Financially Successful in 2023

The start of a new year the ideal time to set goals for yourself, particularly regarding personal finances. Starting with a blank slate and developing a plan for the financial milestones you hope to achieve will allow you to hit the ground running in 2023.

Getting a head start will allow you to develop a solid plan for your income, debts, and savings and ensure that you continue progressing on your short- and long-term financial goals.

Which steps to follow? Read below

Step 1: Maximize your retirement contributions

While saving for retirement may not be on your mind daily. It is critical to keep track of your savings and increase your contributions as time passes to take advantage of potential employer matches and continue to grow your savings for the future.

Changes in your 401(k) contributions usually take one to two payroll cycles. If you believe you will need more time to make these changes, you still have until April 18, 2023, to make any 2022 IRA contributions.

Step 2: Have an Emergency Fund

Experts recommend saving up for an emergency fund to cover your expenses if you lose your job. According to them, such a fund should ideally cover three up to six months of expenses. You’ll need to spend less and save more if you don’t have three to six months’ worth of expenses saved up.

Step 3: Boost your savings

If your savings account balance is not where you want it to be, there’s a simple way to improve your savings strategy: consider where you’re putting your money. While keeping it in a traditional savings account is convenient, it is better to keep it where it can grow, such as a high-yield savings account, which typically have higher savings rates than traditional savings accounts.

Step 4: Assess that your withholding and approximated tax payments are adequate.

The last months of the year are an ideal period to double-check your withholding and estimated tax payments. The federal underpayment rate has been so low in recent years that some taxpayers have become less concerned about meeting estimated payment requirements. The underpayment rate is now 6% as of October 1.

If you’ve been making quarterly estimated tax payments throughout the year, now is the time to see if you still need to make one in January.

Step 5: Look for sources of passive income.

Passive income streams are the holy grail of financial independence but require significant preparation. Passive income streams can be created as intermediaries between suppliers and customers, affiliate marketing, and earn advertising revenue from websites. Some have purchased vending machines and rented property.

It’s critical not to put too much money into passive income streams in the hope that they’ll pay off. It takes a lot of effort to reach the point where you can earn passive income.

Step 6: Prioritize Saving for Retirement

Passive income streams are the holy grail of financial independence but require significant preparation.

According to experts, your target retirement savings goal should be 5% to 10% of your gross income. This percentage does not include the amount you put aside for an emergency fund. If you want to increase your retirement savings this year, consider increasing your contributions to take advantage of any possible employer match. Many employers will match your contributions to a specific dollar amount or percentage of your salary, so if you don’t contribute enough to your retirement account, you could be wasting money.

Step 7: Create a Will

Passive income streams are the holy grail of financial independence, but they require significant preparation.
Although writing a will may seem morbid, it is a responsible step toward financial security.

Having a document for those in your life to tell what happens in the event of your death. It will not only allow you to acknowledge all of your assets, but it will also be a relief to know that your belongings will be properly cared for.

If your financial situation is still a work in progress, take advantage of the time before the new year to figure out how to correct it. Small budget adjustments, savings contributions, debt repayment strategies, and spending habits can all add up to significant progress toward your financial goals over time.