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How to get a start on your New Year's financial goals
Now is the time to review your budget, savings, investments, credit score and debt
Fall has yet to begin, which might make it feel premature to start thinking about your financial goals for the new year. But as we approach the final quarter of 2023, it's the perfect time to check in, especially if you missed the midyear mark. So before the holiday madness takes over your to-do list, consider taking a moment to reflect on your financial progress toward this year's financial goals, and then start thinking about what goals you may want to set for the new year. Because ready or not, 2024 is right around the corner.
1. Review your budget
"If you haven't taken a look at your budget since the beginning of the year, you may find that it isn't working as well as you'd hoped it would," according to Kiplinger. For instance, you may find your spending habits have fallen out of line with the parameters you set or that increased costs of living have thrown off your initial math.
For this exercise, "identify areas where you're spending more or less than expected," and then "choose whether to allocate more money to them or find ways to cut your spending," suggested Bankrate. This is also a good time to determine whether your emergency fund is adequately stocked. Aim to have three to six months of living expenses stashed away in case the unexpected happens.
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2. Reevaluate your retirement savings
See if you've saved as much as you'd hoped this year, and determine whether you can start saving more. For instance, if "you've gotten a raise, you likely have the ability to put away more money," per Bankrate. In other cases, temporarily cutting back a bit might be the right move, such as if you're dealing with unplanned expenses, then formulate a plan for how you can get back on track next year, perhaps making retirement savings a 2024 priority.
3. Check in with your investments
"The stock market has seen its fair share of ups and downs this year, and you want to know how your money has been affected by it," stated Kiplinger. This fall is as good a time as any to ensure your portfolio is still adequately diversified and that you're comfortable with the amount of risk you're assuming. With that information, you can start to formulate investing goals for 2024.
Not sure if your portfolio is on the right track? One way to gauge that is the rule of 100, wherein you "take your age and subtract it from 100," with the result being the percentage of your portfolio that should be invested in stocks, Kiplinger explained. This means "if you are 40 years old, 60% of your portfolio should be in stocks, but "if you are 60, then only 40% of your portfolio should be in stocks," per Kiplinger.
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4. Take a look at your credit report and score
An important part of your financial health is your credit. To view your credit report, visit AnnualCreditRepoert.com, where you can get "free reports weekly at least until the end of the year," according to The New York Times. Keep an eye out for any errors or signs of fraud.
Meanwhile, check your credit score by pulling up a credit card or loan statement or using a free credit scoring service. If your score has changed since you last checked, figure out why that's the case. Then, if needed, adjust your behavior accordingly.
5. Assess the status of any debt
Check in with any debt you've accumulated, and formulate a payoff plan. With holiday spending right around the corner, you don't want to set yourself up to get overly burdened by debt.
Two common debt paydown strategies you might consider are a debt avalanche, which prioritizes the debt with the highest interest rate, and a debt snowball, which "focuses on paying off the smallest balance first to build a feeling of success," the Times stated. You could also look into consolidating your debts, which "may reduce what you owe each month," per Bankrate.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She has previously served as the managing editor for investing and savings content at LendingTree, an editor at SmartAsset and a staff writer for The Week. This article is in part based on information first published on The Week's sister site,Kiplinger.com.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
