We all know that the holidays can be quite a busy time. We must remember to stay focused on our financial goals during the holidays. Make sure to budget and plan, so you don’t make financial mistakes you’ll regret in January.
2022 Financial Checklist
Before the year ends, remember to review what you accomplished in 2022. Did you get that promotion or new job? Did you buy that car? Pay off some debt? What did you achieve financially? You need to review your 2022 Financial Checklist. Write out these categories on a sheet of paper and fill in the blanks for yourself. Now, once you’ve written your 2022 financials, take a pause, and see what you’ve accomplished – Congratulations! Few people look at their financial progress they have made in one year. Small and steady saving and debt pay down wins the race for financial independence.
- Debt paid (Mortgage, Student Loans, Car): $________
- 401k/Retirement Accounts: $________
- HSA/FSA: $________
- IRA: $________
- Brokerage: $________
- Savings: $________
- Vacation Fund: $________
- Other: $________
New Year, New You?
2023 is next month, which means you need to think proactively what you did well in 2022, and where you need to improve financially. In your 2022 Financial Checklist, you saw what you’ve achieved financially. You also have seen where you did not do as well. Where can you improve? What can you do differently in 2023? Did you save as much as you wanted? Maybe there is a trip you want to take to Europe next summer – it’s the perfect time to start planning and saving for your goal. Based on your 2022 Checklist, what are your financial goals for 2023?
- Debt paid (Mortgage, Student Loans, Car): $________
- 401k/Retirement Accounts: $________
- HSA/FSA: $________
- IRA: $________
- Brokerage: $________
- Savings: $________
- Vacation Fund: $________
- Other: $________
2023 Updates
Student Loans: While President Biden has mentioned Student Loans Forgiveness, there are numerous outstanding lawsuits challenging the legality. The Supreme Court will be reviewing in February 2023, if this is a legal action the President can enforce. In the meantime, if you’re not paying on your student loans due to the pause, you should begin to save, just in case your payments commence, and you do not obtain forgiveness.
401k Retirement Account: In 2023, you will be able to save up to $22,500 (+$2,000 to 2022 IRS Limitations – Catch up increased to $7,500 for those 50 and older). At a minimum, invest enough so you obtain your company 401k Match – it’s free money! Depending on your company offering and your age and financial considerations, I personally recommend the Roth 401k. I would rather pay taxes today and reap the benefit of long term compounding without ever paying taxes again. My company matches 50% up to the IRS limit. So, if I contribute $22,500 to my 401k next year, I will obtain $11,250 in Company Match, bringing my total 2023 contribution to $33,750. Learn more about the 401k basics here!
Health Savings Account (HSA): In 2023, you will be able to save up to $3,850 (self-only coverage) and $7,750 (family coverage) – this is a $200 increase for self-only coverage and $450 for family coverage. The catch up contribution for those 55 and older is unchanged for 2023 at $1,000. I recommend the HSA over the FSA because you can invest these funds and are not forced to use them within a specific calendar year.
IRA/Roth IRA: In 2023, you will be able to save up to $6,500 (+$500 to 2022 IRS Limitations – Catch up unchanged at $1,000 for those 50 and older). I personally love the Roth IRA, so I can have additional money invested that compounds tax free. Quick Tip: Don’t forget to invest your monies in your IRA or Roth IRA. Many people tell me they contributed money into their account, but nothing happened. They didn’t invest! You should contribute AND invest in a low cost index fund. If you make above the income threshold, you can complete a Backdoor Roth – learn more here!
My Personal Goals for 2023:
- Max out my Roth 401k and obtain full company match (+$33,750)
- Max out my Roth IRA (+$6,500)
- Max out my HSA (+$3,850)
- Save in my savings and brokerage account (+$10,000)
- Read 12 books
- Travel (Iceland, Faroe Islands, and Norway)
- Exercise 5x per week
- Spend more time with family and friends
Conclusion
When I reflect on what I have accomplished in 2022, I feel so thankful for my family, friends, and coworkers who have helped me along the way. You are a reflection of those who you surround yourself with.
Before 2022 ends, reflect and be proud of what you have accomplished. I am so proud of what you are accomplishing and how you are working towards your financial goals so that one day you will achieve financial independence. It can be hard at times but remember to focus on the long term picture. 2023 will be one less year until you achieve your financial goal. Your financial future is up to you and only you. What are you going to do about yours?
Until next time,
Zach
