5 Financial Goals to Set for 2023December 28, 2020
Updated November 12, 2021
The holidays are approaching, and in the midst of the seasonal excitement, it’s easy to forget to evaluate your yearly financial goals. Before the New Year, take some time to consider your money management strengths and weaknesses, and determine where you’d like to focus your budgeting efforts in the coming months.
Here are five financial goals you can set now to set yourself up for financial success in the New Year.
Build Your Emergency Fund
Even if you’re a money management expert, emergencies happen, and you may be faced with unexpected costs in the New Year. Saving an emergency fund for unforeseen expenses is a great way to remain financially secure.
Many experts say that it’s smart to have at least $1,000 put away as a safety net. Once you’ve accomplished that goal, continue working on your emergency fund until you’ve saved enough to cover three months’ necessity expenses if an emergency should arise.
Pay Down Debt
When looking toward the year ahead, formulating a strategy for paying down debts should be at the top of your list of priorities. Whether you have student loans, a car loan, a mortgage, or credit card debt, tackling your debt head-on is the best strategy for saving money long-term. Two popular strategies for paying down debt quickly are the debt snowball method and the debt avalanche method. The debt snowball method involves paying off your lowest balances first, and the debt avalanche method involves paying off your debt with the highest interest rate first. Setting a goal for paying off specific principal balances and determining how much you’ll need to pay in order to reach those goals will make repayment easier.
If you’re in good credit standing and have a stable income, one option for paying down debt faster is refinancing your loans. We are currently in a historically low interest rate environment, so refinancing to a lower rate on your mortgage, student loans, or car loan could help save you significant money over the life of your loan. Education Loan Finance offers low rates and flexible terms for student loan refinancing.*
If you’re still in the early years of your career, now may be a good time to start making your money work for you by investing. Investing is a great way to save up money while also accruing wealth over time, allowing you to reach financial goals like retirement. While investing may seem like a difficult task, the good news is that it’s easier than ever to get started.
Before you start, formulate a plan for how much you will invest, decide on your short and long-term goals, understand your risk tolerance, and most importantly, decide where you’re going to invest your money. Check out our Millennials Guide to Investing to help you make these decisions.
Cut Out Unnecessary Costs
With all this money going toward your emergency fund, paying off debt, and investing, you’ll want to do everything you can to eliminate unnecessary costs. Deciding where to cut costs depends completely on your individual priorities, but it’s always good to start by listing out all of your expenses and deciding where you can sacrifice. Some examples of areas where you could cut costs include:
- Dine out less frequently
- Make coffee at home
- Internet and streaming subscriptions
- Utility costs
- Shop around for insurance
- Change phone plans
- Make gifts for people
Save for Travel
As the COVID-19 pandemic continues and travel options are limited, if you’re itching to hit the road, now is the perfect time to consider starting a vacation fund. That way, once restrictions are lifted and you can visit all the places on your bucket list, you’ll already have savings set aside for your next grand adventure. Plus, having a vacation fund gives you something to look forward to in the months to come.
We’re all looking forward to a fresh start in the New Year. If you keep these financial goals in mind, you can set yourself up for financial success in the months ahead. Visit the ELFI blog for more tips on achieving financial freedom.