Here are the first 5 financial steps you need to make in 2023 – The Motley Fool

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Get them early for a financially successful year.

Most important points

  • The moves you make at the start of a new year can put you on a solid path.
  • These specific tasks, such as preparing a budget, assessing your emergency fund, and more, will help you manage your income, increase your savings, and avoid losing unnecessary interest on debt.

The start of a new year can read like a fresh start for many people. And it’s a good time to pay close attention to your finances. After all, you probably have short-term and long-term goals on your radar. And the smarter you are about managing your money, the more likely you are to reach them. With that in mind, here are the first five financial moves you should make once 2023 picks up momentum.

1. Draw up a budget

Your income may have changed in 2023 and your expenses may have changed as well. That is why it is important to prepare a budget early in the year. That way, you can see which bills you need to manage and make sure you’re not overspending on any particular expense category.

2. Assess your emergency fund

It is always a good idea to have enough money in your pocket savings account to cover at least three months of essential living expenses. The beginning of the year is a good time to look at your savings balance and crunch some numbers to make sure you can pay those three months’ worth of bills. If not, it’s a wake-up call to free up more room in your budget for savings purposes.

3. Map out a debt repayment plan

Maybe you built up some debt over the holidays. Or maybe you wore one credit card balance before the holidays started and you failed to pay it off in 2022. Now is the time to figure out how you are going to handle your debt so that it is ideally gone by the end of the year if not sooner . That could mean looking at ways to consolidate your debt, such as taking out a personal loan to pay off several credit card balances, or to transfer balance to a new credit card.

4. View your credit report

Your credit report paints a picture of how reliable you are as a borrower. It’s a good idea to read that report carefully and address any issues that might cause lenders to think they shouldn’t lend you money, such as a history of late payments. It’s also important to inspect your credit report for errors that could hurt your chances of getting a loan approved. Credit report errors are not that uncommon, and you will definitely want to address any errors you come across.

5. Set up an automatic transfer to your IRA

Allocating money to retirement savings can be tricky when you have bills to pay immediately. It’s a good idea to put the process on autopilot. A lot IRAs let you set up an automatic transfer so that money goes directly into your pension plan every month. That’s money you won’t be tempted to spend, which could lead to a bigger nest egg.

Perhaps you have a myriad of different financial tasks that you hope to tackle in the new year. But it’s a good idea to prioritize these five items once you’ve recovered from your New Year’s Eve party and are ready to take on 2023.

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