Annie Nova -
CNBC
New year and new habits?
Probably not.
One of the revelations likely to come in 2023 is that you are largely the same person you were last year.
Suddenly he doesn't love running or taking vitamins.
But sometimes it's good that things don't change, and the fact that many of the monetary moves we should make remain the same from year to year at least gives us more opportunities to try and get them right.
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Here are three of the most important steps to take now (and at the start of each year), according to financial experts:
1. Update your budget
“The new year is an opportunity to reflect and start fresh,” said Brian Bender, head of Schwab Retirement Plan Services.
“That should include your financial plan,” he added.
Bender recommends making a list of the big expenses you anticipate for the coming year, including a possible move, a wedding, or an expensive vacation.
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It is in your best interest to include these expenses in your budget and be prepared for them.
Similarly, if you're changing careers or expecting a raise at work, you'll want your new budget to reflect that.
Kimberly Palmer, personal finance expert at NerdWallet, explains that to find out how much you're spending, you can review your purchases from the past two months.
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“From there, you can make a rough estimate of where you want your money to go,” Palmer said.
A helpful rule of thumb is the 50/30/20 budget, which allocates “50% of your take-home pay to needs, 30% to wants, and 20% to savings and debt.”
2. Review your emergency savings
Having a solid savings account for emergencies is one of the best ways to sleep peacefully at night, says Cristina Guglielmetti, president of Future Perfect Planning in Brooklyn.
According to Guglielmetti, the amount of money people need to save varies, and the beginning of the year is the perfect time to assess how much is right for you.
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To start, it is normal to calculate the main monthly expenses, such as rent, food, utilities and pet care, and then decide the number of months that we want the account to cover us in case of job loss.
(Of course, that money would also come in handy for a one-off emergency, like an unexpected car repair or medical bill.)
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“It can be little, from one to three months, especially if there are other savings to draw on, the possibility of family support or if one or both jobs are very stable,” Guglielmetti explained.
"Or it can go up to nine or 12 months if someone prefers that kind of security," he said.
He recommends keeping the cash in a high-yield savings account.
You just want to make sure that any account you put your savings into is FDIC insured, which means that up to $250,000 of your deposit (per owner, per bank) is protected against loss.
3. Make sure you're on track for retirement
The start of a new year is the best time to review your retirement savings goals and make any necessary changes.
Some people can take advantage of increased annual contribution limits to 401(k) retirement plans at work ($22,500) and individual retirement accounts ($6,500), Guglielmetti explains.
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Workers age 50 and over may choose to make additional “catch up” contributions.
However, even a small increase in your savings rate can be powerful, according to Rita Assaf, vice president of retirement with Fidelity Investments.
Assaf gave an example: For a 35-year-old making $60,000 a year, increasing their contribution to retirement savings by 1% (or less than $12 a week), could generate an additional $110,000 in retirement, assuming an annual return of 7%.
“If you have access to a company match 401(k) plan, try to save at least up to the company match level.
If you don't, it's like leaving free money on the table," Assaf explained.
