Good Financial Moves to Make Before the Start of 2023

Financial moves before the New Year

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Credit Sesame suggests a few good financial moves to make before the start of 2023.

Most people start the new year with resolutions to lose weight, exercise more, finally learn how to play the piano, or even get a new job. But why wait until the new year to improve your finances? Start now, and you may be in a better position to achieve some of your other goals.

Many New Year’s resolutions fall by the wayside after a week. Even 80% of the most resolute people give up in two years, one study found. With the right plan and working on them at the end of the year and into the new year, if necessary, you could make your financial life easier and better in 2023. 

Write down your financial goals

You are 42% more likely to achieve your goals if you write them down, according to one study. It helps make them clear and can motivate you to achieve the tasks to get there.

It can also help to start setting goals before this year ends, giving you a chance to get a head start on them. Writing them down can include more than setting a timeline for achieving them. Set up phone alerts and other ways to remind yourself of them throughout the year. to help you keep on track.

Check your credit

Knowing your credit score is always a good idea. It can be a good way to start off a new year so you can make changes toward improving it. If you’re making a big purchase in 2023, such as a car or home, then improving your credit score can lower the interest rate you’re charged. It can also help with the rate on your credit card, and make getting an apartment or job easier.

Federal law allows consumers to get a free copy of a report every 12 months from each reporting company. Check all your credit reports for free at AnnualCreditReport.com. Look for errors and get them fixed.

After fixing errors, work on areas that are causing your score to remain low. Typically, paying your bills on time and in full raises a score the most. 

Plan what to do with windfalls

You probably have a good idea what you’d do if you won the lottery, but since that’s unlikely to happen, then you should at least have a plan for any year-end windfalls you may get. And in the coming year, if you get a life-changing amount of money through a stimulus check, raise, inheritance, bonus at work or other large amount of cash, you can avoid squandering it on unplanned overspending.

Windfalls are basically found money that aren’t part of your monthly budget. Instead of immediately spending it, transfer it to a savings account or investment. It could be a great way to start an emergency fund or build up your retirement account.

Review your financial accounts

Your bank accounts, investments, loans, debts and other financial accounts should be reviewed to ensure they’re performing well and don’t have excessive fees.

A fee schedule should be easy to find when logging in online to an account and is required under federal law. Monthly maintenance fees on checking accounts vary but are often waived with direct deposit. What’s more likely are small fees that ding your account from time to time, such as:

  • Overdraft fee
  • Non-Sufficient Fund, or NSF, fee for bouncing a check without overdraft coverage
  • Minimum balance fee
  • ATM fee

If you regularly incur these fees, then change your spending habits if that’s the issue or shop for a new bank. ATM fees can often be avoided by using the ATM network that your bank has. Overdraft and minimum balance fees can be avoided by getting balance alerts and checking your account before buying something.

Interest rates are rising, so if your bank isn’t paying what online banks pay in high-yield savings accounts, then consider moving your savings elsewhere. 

Though your investment accounts may have fallen dramatically in 2022, moving them to another broker may not help much — unless they have lower fees. In an effort to make 2023 smoother, talk to a financial advisor about balancing your portfolio.

Plan ahead for retirement and health

Open a tax-advantaged retirement account and a health savings account if you don’t already have them. If you do, then try to max out contributions before the end of this year.

Contributing the maximum amount to a retirement account before New Year’s Day will help lower your 2022 tax bill and fund your retirement. HSA contributions are also tax-deductible, so make the maximum contribution before the end of the year if you can.

Once you’ve given as much as you can to those accounts in 2022, look at increasing your monthly contributions in 2023 so that you can get the most tax advantages from them next year. Check how much contributions can increase to in 2023, and try to reach them with regular paycheck deductions.

Cut investment losses

Check with your financial advisor to see if tax-loss harvesting is worth doing before the year ends. 

This is the strategy of selling securities in taxable accounts that have lost value for you so you can lower your tax bill. Capital gains from profitable securities are offset by capital losses from lower securities.

Up to $3,000 of ordinary income can be offset by selling underperforming investments, according to the investment firm Schwab. Any amount over $3,000 can be carried forward to future tax years to offset income later.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

Aaron Crowe
Aaron Crowe is a freelance journalist who specializes in personal finance topics. He has written for Wise Bread, AOL, AARP, Bankrate and other websites that focus on financial literacy and saving money. He has also worked as a newspaper reporter and editor. You can follow him on Twitter @AaronCrowe.

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