If you plan to make financial decisions this year, you are not alone.
A Ascension Survey shows that most Americans (two-thirds) plan to make a financial resolution for 2023.
With interest rates rising, inflation still high, worries about layoffs, and the broader economic landscape in general, it makes sense that money-driven decisions are at the forefront of so many people’s minds. ‘Americans.
Here are some of the most popular — and timely — things to do.
Pay off credit card debt
Paying off credit card debt is always a higher resolution, but this year it should be a priority since the average rate on a credit card is nearly 20%. That’s up from just 16.3% at the start of 2022, and it’s the highest since Bankrate started tracking credit card rates in 1985.
“For someone making only minimum payments on $5,000 credit card debt, the rate hikes added seven months to the payback cycle, costing an additional $1,166 in interest,” Ted said. Rossman, senior industry analyst at and .
Given that the Fed has indicated that more interest rate hikes are on the way, this debt will only get more expensive in 2023.
Strengthen emergency savings
An emergency fund is your first line of defense against financial hardship. Without it, you put yourself at risk of financial disaster, but only 27% of Americans saved the recommended six months of spending, Rossman said.
Don’t become a statistic, especially now, because we could be heading into a recession in 2023.
“While most projections call for a relatively moderate reduction (unlike the double-digit unemployment rates we saw in 2009 and 2020), there is only one way for the unemployment rate to rise to from here: up. Even a 5% increase in unemployment would mean about two million more people out of work,” Rossman said. “I’m not saying that to scare people, but rather to emphasize the importance save for that proverbial rainy day.”
“It might not even be a job loss,” he added. “It could be a broken fridge, a leaky roof, a surprise medical bill or some other unexpected event, and you need to be prepared.”
Readjust or revise your budget
It’s a good idea every year, but it’s especially important after a year of high inflation, said Richard Barrington, financial analyst at .
“Update your budget to make sure you’re spending less than you’re taking home. Otherwise, you’re going to rack up debt,” Barrington said. “It just adds interest charges on top of higher prices.”
Boost your retirement savings
When it comes to saving for retirement, you may feel discouraged considering what happened last year.
“Retirement savings have been hit with a double whammy in 2022,” Barrington said. “A very bad year for stocks and bonds caused the value of most retirement investments to fall. Meanwhile, abnormally high inflation means you’ll need more money to live on when you retire.
Keep your emotions in check and keep contributing to your retirement account – at least enough to qualify for full matching from your employer. These matches usually involve a contribution of 3% to 5% of your salary.
If you can’t afford to contribute that much right now, take a slow and steady approach with gradual increases that over time can make a big difference.
“Remember to try to increase your contribution by a percentage point or two in six months,” Rossman said. “Every dollar you set aside for retirement in your 20s and 30s could be worth $15 or even $20 when you retire.”
Improve your credit
The kind of environment we’re heading into in 2023 — higher interest rates and a slower economy — makes it especially important to have a strong credit rating, Barrington said.
“With rising interest rates, you’ll want a good enough credit score to qualify for the lowest rates available,” Barrington said.
Also, in a slow economy, defaults on credit payments tend to increase, Barrington added. This may cause banks to tighten their credit standards. If you want to continue to have credit available, it’s a good idea to make sure your credit score is in tip top shape in 2023.”
Personal finance journalist Vera Gibbons is a former editor of SmartMoney magazine and a former correspondent for Kiplinger’s Personal Finance. Vera, who spent more than a decade as an on-air financial analyst for MSNBC, is currently the co-host of the weekly non-political news podcast she founded, NonPo. She lives in Palm Beach, Florida.
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