Every new year brings new beginnings and it is going to be the same in the upcoming New Year 2023. We craft huge plans and make multiple resolutions but there is one thing we miss is looking back. Although it is not a good thing to get caught up in the past we should definitely analyse how we spent our last year to figure out mistakes we should not repeat.
In addition to that, we make a list of the things we are supposed to do in the upcoming year but we do not know the things we should avoid for a better future. I personally think that even if we do not make any new changes in our lives, skipping the harmful ones is also a step ahead in life.
Keeping all these things in mind, I will be sharing the top 5 financial mistakes that you can avoid in the New Year 2023 which are far better than making huge resolutions that we can barely keep up with.
1. Planning Before Dealing
If you have certain financial goals for the upcoming year or any debts you wish to deal with, then I suggest you create a plan to deal with them. Once you have a plan, then only you will be able to make informed and well-thought-out decisions about your finances.
Take it from the experience, if you work out your finances without a plan, you may take the worst financial decisions possible.
I suggest you first plan to eliminate the debts on your head for which you should save 150% of the amount you owe. Once that is done, pay off your debt and start working on your emergency fund to secure yourself from any financial tragedy. Once that is also done, start exploring your investment options to get promising returns in future.
2. Disposable Spending
When you have a certain amount of money in your hand, you have two options: either go shopping or invest it in a good place. When standing at such a crossroads, ask yourself that in 5 years, what will you benefit the most from? A pair of expensive boots or the returns from the investment made 5 years ago?
We both know the answer to this question. Always remember that your needs come first, then comes investment and after that, you should spend on your well-thought-out wishes.
3. Contingency/Emergency Fund
As discussed above, everybody should create an emergency fund before they start investing. Once you are over your debts, you need to focus on accumulating your emergency fund which should be at least equal to your 3 months’ expenses. The ideal amount of this fund would be your 6 months’ expenses.
4. Insurance Coverage
Health is the most precious asset of all time and we need to protect it in all cases. The best way to do this is by having health insurance. In case you do not have one, avoid going through the next year without one.
Good health insurance helps you survive through medical needs without putting much to no pressure on your bank account.
5. Now than Never
If there are certain financial plans you would like to execute in the upcoming New Year 2023, then craft them already. As we have heard many times, the best time to do something is now. If you think you have waited for enough time to get on to do something, then do not wait for the 1st of January now. Start doing it as soon as you have faith that you are doing the right thing.
In this article, we discussed the top 5 financial mistakes that we need to avoid in the New Year 2023. There are certain things that we are doing wrong and instead of making huge resolutions, we can just avoid making some mistakes and still call it progress.
I would like to point out that finance is a personal thing and everyone reading this article has different financial conditions which create different financial needs. So, when you are planning your finances for the future, make sure to make it a personal thing and not discuss it with people other than the ones getting directly affected by it.
Please share this article with people who you think would benefit from this article to create a better financial situation for themselves.