Personal finance has never been taken more seriously than in 2022 with rising interest rates, increasing inflation, and uncertainties in stock indices.
Other than a change to a healthier lifestyle, financial goals come next in line and it can be easier to achieve if you can see where your money goes.
Wouldn’t it be great to be financially secure while also making an ethical and social impact?
Here are some tips to help you improve your financial situation and hit your ethical goals in 2023.
Tips to Improve Your Financial Life in 2023
When it comes to financial planning, a financial resolution can be as broad as deciding to live a healthier life in the year ahead.
There are three steps to narrow down your goals and figure out what’s most important to you which can keep you on track in the long run.
Define What Is Your Most Important Financial Goal for 2023
What do you hope to accomplish in the coming year to get closer to your biggest life goal?
Our dreams and short-term goals are frequently linked with our financial goals.
Having specific new year’s resolutions that are aligned with your values can help you avoid going on a financial wild goose chase.
Examples of Financial Goals:
Building up your “rainy-day savings”:
Creating an emergency fund, as part of your financial plan, can be beneficial to both your bank account and your peace of mind. A savings goal of at least three to six months’ worth of your living expenses is the general rule for emergency funds.
You can take it a step further by opening a savings account with a high interest rate at banks that meet your environment and ethical standards.
Creating a budget and trimming down expenses:
Do you ever wonder at the end of each month where your income was spent and why your cash flow is like a well running dry?
Part of a good financial plan is tracking where your money goes to gain better control over your finances. Creating a budget is a smart way of putting your financial records in order by identifying your income sources, monitoring your expenses, and categorising these transactions. You can use a budget planner and let it do the work for you.
Creating an ethical nest egg for your retirement:
Investing in retirement can help provide an income to achieve your retirement lifestyle. While working on your nest egg, be meticulous by ensuring that your investments align with your values. Seek the services of a trusted ethical financial adviser, such as Novo Wealth, to make certain that your money is being invested ethically.
Create Smaller Financial SMART Goals That Build Towards Your Big Goal
SMART goals in financial planning are like building blocks of financial plans. Just like a million dollars starts from one dollar, one big dream could be achieved from one small step.
What are Financial SMART Goals?
SMART goals are Specific, Measurable, Achievable, Realistic, and Time-bound. When it comes to finances, using this method can help you break down the goal into its key components.
Specific : Specify exactly what you intend to do with your money.
Measurable : Describe how you will track your progress.
Achievable : Plan the practical steps you’ll take to reach your goal.
Realistic : Make sure the goal is realistic for your financial situation.
Time-bound : Set a deadline for when the goal must be completed.
Develop Healthy Financial Habits
If you don’t have a plan to follow, your financial goals will remain as dreams.
Getting into these three healthy financial habits can help you reach your financial goals for the new year.
- Know where you are spending your money
Tracking your spending for a short period of time can provide insights into how you spend money now and may highlight how even small amounts add up over time. Have a short list of your preferred ethical and sustainable businesses and non-profits you want to support so you can easily make a choice where to spend your money.
- Prioritise needs over desires
Consider whether each purchase has a genuine purpose and value, or whether that money would be better kept in your savings account that could earn interest.
It might be tempting to withdraw funds from your savings account using your atm card and stuffing your cart with what you want, but if you have your priorities and ethical preferences in check, you’ll:
- be more conscious of what you pay for
- manage your spending for what you really need, and
- make purchases that support the causes you believe in, like that small business at the farmer’s market.
- Pay yourself first
Ensure that you are the first person you pay each month by setting up an auto debit to your savings account. Make a point of allocating your savings before spending it elsewhere. And if there is anything left over at the end of the month, consider putting it in a savings account that will earn interest to make your money grow.
How To Set Financial Goals for the New Year?
The first and most important step is to understand that you need a simple financial plan and have clarity when it comes to your ethical preferences. You’ll be well on your way to reaching your financial goals if you do some basic budgeting and grow your savings before the new year.
Remember to regularly remind yourself of what you’ve decided to do. You can’t keep your spending in check if you don’t know your WHY.
Here are 3 Simple Steps to Set Financial Goals for the New Year:
- Think Back on the Previous Financial Year
Reflect on the previous financial year, review your balance sheet as well as your bank accounts, and determine whether you have met your objectives or not.
How much interest will your savings earn if you maintained your bank account with just the minimum balance?
If you realise that you have not achieved your 2022 goals, you need to start making changes in your saving and spending habits, focus on growing your bank balance and investment assets in order to achieve your goal for 2023. You can’t expect a different result if you implement the same strategies that did not bore fruit.
- Make SMART goals
It is critical to have a specific financial goal by making a financial goals board that can serve as your visual money game plan. Once you’ve determined your overall goal, you can break it down into smaller, SMART goals to help you get there.
- Be accountable and stick to your goals
Sharing your goal with your friends or family is a simple way to hold yourself accountable. Having an accountability buddy, like a friend who is also trying to save, can help you stay motivated to reach your goal. Using a financial goals tracking spreadsheet – whether the good old pen and paper or an app – can help monitor your progress.
Want to Secure Your Financial Future in 2023? Talk to Novo Wealth – Ethical Financial Advisor Based in Adelaide
Managing your finances does not only benefit you but also the world in the long run. If you find a trustworthy financial advisor, you can make a difference in your financial future while staying true to your aspiration of being socially responsible.
Book a complimentary meeting and get started on achieving your financial goals!