How to Improve Your Finances in 2023

It’s that time of year where everyone starts to make their resolutions, and there is no better resolution to make than to improve your finances.

2022 was certainly a hard year for the markets. It was a tough year for Americans overall.

High inflation, rising rates, and uncertainty affected just about everyone.

But when the calendar turns to the New Year, there is reason to be optimistic. More importantly it is a good time to reset and take control of what you can.

Below are a few things you can do to save money and make more money in 2023.

Increase Deductibles

When looking at your insurance, in particular auto insurance, there are a few ways you can save money.

Everyone knows to drive safely. This will help to avoid speeding tickets and at fault accidents and as a result help to keep your insurance premium low.

In addition, you could always drive a cheaper car to help keep the premium low. But what if those are not options for you?

The next thing you could do to lower your monthly payment is to increase your deductible.

Rasing your deductible from $250 to $500 could save you as much as 8%. Increasing it all the way from $500 to $2000 can save you up to 17%.

Some of you might be asking at this point what is a deductible? Simply put this is the amount you would have to pay before insurance kicks in if you were in an accident.

As an example, let’s say you were in a fender bender. Your total damage was $5,000. If your deductible was $500 you would pay that amount and the insurance company would pay the remaining $4500. If your deductible was $2000 the insurance company would only pay $3000.

This is why it pays to be a safe driver. It helps to avoid accidents, you never have to pay a deductible, and you save money monthly on the premium by having a higher deductible.

Cancel Unused Subscriptions

We all have those subscriptions that we don’t use.

For some of us it might be the gym we signed up for but never go to. For others it might be a country club membership. Or it could be an unused streaming service.

Whatever it is cut it out if you determine you don’t truly need it.

I have seen clients save hundreds and even thousands of dollars a year by cutting out expenses they never use.

Go through your last 3 months of payments. Look to see if there are any you did not use over that time. If there are some, assess how likely you are to use them in the future.

If it is unlikely ditch them and start saving.

Shop Around

The price of groceries has increased a staggering 12% in 2022.

My family of 4 is now spending over $200 for two weeks’ worth of groceries. Nearly $50 more than we were before.

If you are in the same spot, try shopping around for groceries. Store like Aldi can help save over larger grocery stores.

Memberships to Sam’s Club or Costco can give you savings for buying in bulk. They can help you save on gas too!

Not always going for the name brand can help shave a few bucks off your bill too.

Whatever it is just make sure you are getting the best deal to save yourself money. Every penny counts these days.

Rebalance Your Portfolio

Most people’s portfolios were hit hard last year. Especially those people who invested in stocks.

The beginning of this year is the perfect opportunity to rebalance your portfolio to try to earn back some of those paper losses.

For instance, let’s say that I am working with a client who has a 60/40 stock to bond portfolio. The stock market was down nearly 20% last year and the bond market pulled back about 14%.

This same investor would start 2023 with a portfolio that was 58/42 stock to bond split. If they did not rebalance for a few years this portfolio could get further away from their ideal 60/40 allocation.

Not to mention the fact that stocks typically outperform bonds in the long run. And if you have less stock in your portfolio you could limit your future returns.

This is why it is important to rebalance at least once annually to make sure you are always at the right mix. Doing so will help you to reach your long-term goals more efficiently.

Invest Extra Money

For those of you who showed restraint and did not put as much money into the market last year, consider putting it to work now.

The S&P 500 lost about 20% last year.

More often than not a down year is a one off in the markets. Furthermore, the market goes up 70% of the time after a down year.

This is a great opportunity to buy back into the market at a lower price point and use history as your leverage. While the past does not predict future returns and can help you decide when might be a good time to get back into the market.

If you were buying in 2021, we are pretty close to those levels again. It might be time to get back into the race.

Wrapping It Up

It is always important to rethink your financial plan at the beginning of a New Year.

It is even more important to do so after a down year.

Above are some ways to save money in the New Year and have your money work a little harder for you. There are certainly more but many of these require little to no effort on your part. Which makes them a very appealing place to start.

How are you rethinking your financial plan in 2023?