Prioritize Your Financial Health in 2023
As the new year approaches now is the perfect time to sit down and think about what sort of changes you’d like to make to better yourself and your quality of life. If achieving financial independence and lasting financial success is something that you dream about, the key to doing so lies in adopting wealth-building habits that can help you can build your wealth for the long term.
If you’re looking to prioritize your financial health and build your wealth this New Year, try incorporating the habits below into your financial planning strategy. With knowledge and commitment, you can find more financial success in the new year and beyond.
Wealth-Building Habit #1: Live Within Your Means
Regardless of the size of your paychecks, the most crucial first step to building your wealth is to create and follow a budget. While this is most likely the least glamorous or fun aspect of financial planning, it becomes the foundation that will support the rest of your strategy. To begin, you’ll first have to track where your money is coming from and going so that you can gain a clear understanding of what your financial reality is. Once you have a solid grasp of your money habits, then you can create a budget that’s doable and works with your financial situation. It can be hard to commit to following a budget for the rest of your life, so instead work hard to follow it for three months at a time, at which point you can reassess things as needed.
If you’re struggling to create your budget or need a little guidance, you’ll find an abundance of budgeting apps available that can be great tools to help as you go. Of course, a simple spreadsheet or even a paper planner can work, too! Whatever you use, the key is to keep your information organized and in one place so that you’ll have an easier time tracking and staying on top of your spending.
Wealth-Building Habit #2: Commit to Saving as Much as Possible, as Often as Possible
While it’s never too late to start committing to wealth-building habits, earlier is better. Start saving for retirement and an emergency fund as soon as possible. It can sometimes feel daunting to tackle multiple savings streams simultaneously, but every little bit makes a difference so pay attention to your budget, consider your priorities, and funnel any excess cash you have each month into your savings.
It may help to keep you motivated if you set specific savings goals for yourself. Determine how much money you want to save to which accounts and give yourself a deadline. By breaking large savings goals into smaller, tangible steps, you’ll have an easier time keeping yourself on track.
Wealth-Building Habit #3. Make Your Debt Work for You, Not Against You
The word “debt” often has bad connotations. However, it’s important to remember that not all debt is created equal. In fact, some types are actually considered good and can be helpful if you’re working to build your wealth.
If you’re unsure about the difference between good and bad debt, take some time to educate yourself on the various debt types and how they may impact your finances. Credit cards and high-interest loans, for example, are generally understood as bad debt since they can be difficult to repay and provide a low return on your investment. On the other hand, mortgages and student loans aren’t seen in quite the same way since they provide the potential to boost your wealth down the road. As you consider your future plans, it’s possible that taking on the right kind of debt will be the smartest step to take.
Wealth-Building Habit #4. Invest, Invest, Invest
Chances are, you want to build wealth not only for yourself but for your loved ones, too. That means fully committing to investing in your future – and the futures of generations to come – whenever possible. You may have heard the phrase, “pay yourself first,” and it’s an often-repeated adage for a reason. Aim to invest 10 – 20% of your paycheck directly into savings – and do it before you begin to put your money anywhere else. Of course, you’ll need to strategize and be mindful about where you’re putting your money, too.
Investing is one of the savviest wealth-building habits to boost your savings, build wealth, and bring you closer to your financial goals. Generally, the rate of return for investments – even conservative ones – is higher than any rate of return you’ll find in a savings account. Investing in the markets can be risky, however, so it’s important that you do so wisely. Build a diversified portfolio that considers your risk tolerance, cash flow needs, time horizon, and your financial goals to jumpstart your wealth building and keep it growing over item. You may want to consider working with a professional financial planner or investment advisor to achieve the right portfolio for you.
Healthy Finances, Healthy Life
No matter where you are on your financial journey, it’s not too late to incorporate these wealth-building habits into your strategy. If you’re able to commit to them fully, you’ll be well on your way to building your wealth and bringing yourself closer to achieving your short- and long-term financial goals. Taking the steps to prioritize building your wealth now is a way to gift your future self with a life free from financial stress once you retire.
If you’d like professional assistance in developing a plan to grow your wealth that incorporates retirement planning, portfolio management, and tax strategy, our team at Resolute is here to help. Contact us today to begin a conversation about how we can help you secure your financial future.