Time is the scarcest resource and something we should not take for granted. How do you plan to make the most of this year? I hope some of your goals include improving your financial health. Here are some of the best financial moves you can make in 2023. Doing so can boost your chances of continued wealth creation. Don’t take automatically growing your wealth each year for granted!
The Best Financial Moves To Make In 2023
1) The #1 Best Financial Move = Examine your asset allocation.
The best financial move you can make this year is to do a thorough review of your investment asset allocation. Setting and forgetting it is not a good strategy if you want to stay properly diversified.
For example, you might deploy a 50% equities, 50% bonds asset allocation. But if your equities climb 35% while your bonds decline 10%, and you want a 50/50 balance, you’re out of alignment because your portfolio is now 60% equities and 40% bonds.
Investors should rebalance at least twice a year, regardless of how small the rebalance actually is. Staying disciplined with rebalancing regularly helps refocus your attention on your investments. Doing so helps ensure your risk preferences and investment objectives remain intact.
See: The Proper Asset Allocation Of Stocks And Bonds By Age
2) Review your income and spending.
Another one of the best financial moves you can make this year is to carefully review how much money you have coming in and out. You’ll be surprised by how much you’ve spent compared to how much you think you’ve spent. Chances are high that you’re spending more than you realize.
Personal Capital’s cash flow analyzer lets you visibly see how much money is going in and out each week and month. I check Personal Capital each week to make sure my budget is in check. The app is free and easy to use.
3) Boost your savings another 10%.
If the amount of money you are saving each month doesn’t hurt, you are NOT saving enough! 2023 is going to be another volatile year in the stock market and real estate market.
Therefore, it’s important to boost savings to minimize volatility and have a large enough cash buffer to take advantage of market sell-offs. Cash is king during times of uncertainty! If you aren’t already, earn a higher bank savings interest rate.
In addition to increasing your savings, look for ways to build passive income streams. You may have some already, but why stop there? Set a goal to generate more passive income now so you can have more options later.
Who knows, you just might generate enough to kick up your feet, retire early, and have more years of greater happiness. That’s certainly a best financial move that’s worth getting excited about.
Related: How Much Savings Should I Have By Age
4) Get your resume up to date.
Another of the best financial moves for 2023 is to get your resume updated. Even though many companies have gone through rounds of layoffs, others are hiring. And the best companies are always looking to recruit top talent. It never hurts to keep your eyes open for a new job that offers more money and a better title.
Update your resume with your recent accomplishments and interests. Chances are good you’ve done a lot since you last updated it. You can also use this opportunity to mail tailored resumes for specific job titles you’re seeking. Using relevant keywords is important these days since most resumes are first screened by machines.
See: Examples Of Great Resumes That Get Jobs
5) Protect your family.
Another one of the best financial moves to make this year and every year is to protect your family with insurance.
Adequate health care insurance for yourself and your family is crucial. Perhaps you feel your family is invincible from serious medical issues. But the reality is, no-one is indestructible.
Surprise ailments and accidents happen all the time. Plus, medical expenses are consistently a top cause of bankruptcy in the United States. You could get wiped out overnight without appropriate health insurance.
In addition, you should also keep your family protected with housing insurance, car insurance, and personal property insurance. An umbrella policy can also provide important protections if your assets are larger than what your auto and housing insurance can cover. The linked article explains what an umbrella policy is and how much it may cost.
6) Prepare or update your will.
The sixth best financial move for 2023 is to make sure your affairs are in order. If you don’t have a will yet, write one. For those of you who already have a will, check if it’s up to date with your latest assets, beneficiaries, and instructions.
The wealthier you are, the more important it is to have an estate plan in place to ensure your money goes to where you intend. Don’t let costly probate decide the fate of your fortune.
Utilize this detailed checklist on preparing for your death to ensure your loved ones will be taken care of. The more specific and organized you are, the easier everything will be for them.
7) Get smarter with your taxes.
I don’t know anyone who actually enjoys paying taxes. But the reality is that taxes are probably your largest recurring liability. Thus, you want to do everything you can to minimize your tax bill each year.
The last thing you want is to pay more in taxes a year than you save for yourself and your family.
Stay aware of updates in tax policy including deductions and credits on a regular basis because things are always changing. Tax code isn’t fun to read by any means, but the savings that knowledge can provide is well worth it both short- and long-term.
I sold my SF rental house in 2017 in anticipation of negative tax policies affecting the expensive real estate market. Then, I re-invested $500,000 of the proceeds in real estate crowdfunding through Fundrise to take advantage of higher yields and cheaper valuations in the heartland of America.
Below are the 2023 Federal marginal income tax rates for single filers and married couples filing jointly.
8) Use a free investment analyzer on all your investment accounts.
The last but not least of the best financial moves to make this year is to run a fee checker. At least once a year, I run my investment portfolios through Personal Capital’s Retirement Fee Analyzer. It’s a free investment analyzer that highlights how much you’re paying in fees. Warning – you could be shocked at what it finds.
In order to use the tool, simply link all of your investment accounts to your profile for free. Personal Capital is safe to use and secure. Then, launch the Retirement Fee Analyzer and see how much you’re paying in fees.
I’ve optimized my two portfolios so that my annual fee is estimated at only 0.18% compared to the benchmark of 0.5% due to my selection of ETFs, Index Funds, and specific stocks. The other cool feature is the Investment Checkup feature that shows your current vs. target allocation.
The other benefit of running your portfolio through Personal Capital’s Investment Checkup tool is to see what your overall asset allocation is. Your asset allocation should be congruent with your risk tolerance and financial objectives.
Further, if you have multiple investment accounts like a 401(k), SEP-IRA, Rollover IRA, and after-tax investment account, you want to see a top down overview. See example below.
Ensure A Better Financial Future
One thing the pandemic taught us it to expect the unexpected. It’s vital that everybody prepares for uncertain times. I certainly don’t see the stock market going up another 20% or the real estate market accelerating to new highs. Don’t confuse brains with a bull market!
You can’t expect anyone else to make you rich or offer hand outs. Take your financial destiny into your own hands and start utilizing these best financial moves today.
Remember, if the amount you’re savings each month doesn’t hurt, you’re not saving enough!
