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<p>How to ring in the New Year with better financial health.</p>
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<p id="mntl-sc-block_1-0">It is important for everyone to reset their personal finances and their goals for the New Year.</p>
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<p id="mntl-sc-block_1-0-2">Did you make any resolutions concerning your personal finances last January? If so, how did you do? Did you attain your&nbsp;goals or miss the mark? While the days leading up to New Year's Eve are often spent reflecting on the year gone by, the following days&nbsp;should be spent reflecting on the New Year, reviewing your financial scorecard for the past year, and then looking for ways to improve.</p>
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<p id="mntl-sc-block_1-0-4">The good news about New Year's resolutions is that you get a fresh crack at them each year. Here are some financial moves that you should resolve to make in the year to come.</p>
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<h3 class="wp-block-heading" id="mntl-sc-block-callout-heading_1-0">KEY TAKEAWAYS</h3>
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<li>New Year's resolutions are often broken, but try to keep your financial ones.</li>
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<li>Give yourself a financial checkup to start the year.</li>
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<li>Paying down debt, contributing to your retirement plan, and making a budget that you can keep can all help you ring in the New Year with better financial health.</li>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-8">Calculate Your Net Worth</h2>
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<p id="mntl-sc-block_1-0-9">If you haven't already done so, the start of the new year is an opportune time to determine how much you're worth financially. Calculating your net worth is a key step in assessing your financial health and reaching your financial goals.</p>
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<p id="mntl-sc-block_1-0-11">The resolutions that you need to make will become more obvious after doing this calculation. Looking closely at all your assets and liabilities helps to create a clear picture of where you are prioritizing your current spending and saving and where you may need to make changes in those habits.</p>
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<p><strong>Tip:</strong> It's a good idea to recalculate your net worth each year. Doing so can help you keep on top of your progress toward your financial goals and correct any mistakes that you're making before they create overwhelming debts.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-15">Reset Your Retirement Accounts</h2>
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<p id="mntl-sc-block_1-0-16">If you have the opportunity to save for retirement through a 401(k), 403(b), or 457 plan sponsored by your employer, consider budgeting a set amount each month for your account. And if you can afford to, consider contributing to an individual retirement account (IRA), as well.</p>
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<h3 class="wp-block-heading" id="mntl-sc-block_1-0-18">Employer Plans</h3>
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<p id="mntl-sc-block_1-0-19">If you have access to a 401(k), 403(b), or 457 plan at work, your goal should be to contribute as much as you can reasonably afford, up to the allowable maximums for the year. Note that if you'll be age 50 or older by next Dec. 31, you can make additional catch-up contributions on top of the regular limits.</p>
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<p id="mntl-sc-block_1-0-21">Financial experts typically suggest contributing at least enough to your employer's plan to earn any matching contribution your employer may offer.</p>
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<p id="mntl-sc-block_1-0-23">Are you self-employed? If so, depending on your income, you can contribute to a SEP IRA, profit-sharing plan, or independent 401(k) plan. And if you'll be age 50 or older by Dec. 31, then the contribution limit jumps for independent 401(k)s, helping you save even more.</p>
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<h3 class="wp-block-heading" id="mntl-sc-block_1-0-25">IRAs</h3>
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<p id="mntl-sc-block_1-0-26">Even if you're covered under a retirement plan at work, you and your spouse can each contribute to a traditional IRA or Roth IRA, as long as your combined taxable wages and net self-employment income are not less than the total amount contributed. Anyone age 50 or older can contribute an extra $1,000, increasing the total allowable contribution to $7,500, or $625 per month, in 2023. This is up from $7,000, or $583 per month, in 2022.</p>
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<p>Keep in mind, however, that for the 2023 tax year, a modified adjusted gross income (MAGI) of $138,000 to $153,000 for single filers (up from $129,000 to $144,000 in 2022), or $218,000 to $228,000 for married couples filing jointly (up from $204,000 to $214,000 in 2022), puts you in the phase-out range for being able to contribute to a Roth IRA. There can also be limits on how much of your traditional IRA contributions you are allowed to deduct, based on your income and whether you are covered by a retirement plan at work.</p>
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<p><strong>Important:</strong> You should save only amounts that you can realistically afford, since contributing more than that may result in incurring debts to cover everyday expenses. To determine how much you can save each period, incorporate your retirement plan contributions into your regular budget.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-32">Update Your Savings Goals</h2>
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<p id="mntl-sc-block_1-0-33">Creating easy access to your funds can be tempting. You do run the risk that, if you are like many people, you will spend money that you can get to easily. To help you reach your goals, be sure to transfer amounts earmarked for savings from your checking account to a designated separate savings or investment account. Better yet, have a set amount from your paycheck auto-deposited into savings. That will make it more cumbersome to spend the money that you have managed to set aside.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-35">Make a Plan to Pay Down Debts</h2>
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<p id="mntl-sc-block_1-0-36">Take a few minutes now to set new savings goals for the New Year, including how much you would like to add to your retirement nest egg and/or&nbsp;your children's education fund&nbsp;or put toward the down payment on a new home. You should also reset how much you plan to pay on your personal loans, debts, and home mortgage accounts.</p>
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<p id="mntl-sc-block_1-0-38">Consider paying some extra principal toward your mortgage payment each month. By doing so, you'll earn a risk-free return on that money equal to your mortgage interest rate and cut down on the number of years that it will take to pay off your mortgage. However, if you must choose between adding to your retirement accounts and paying extra on your mortgage, you might want to consult a financial advisor to determine which option is more suitable for you.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-40">Rebalance Your Portfolio</h2>
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<p id="mntl-sc-block_1-0-41">The stock market always has its ups and downs. Some sectors overperform, and some sectors underperform. Chances are that the sectors that did the best last year may not enjoy a repeat performance this year—and, of course, 2022 was pretty grim for most of them. By rebalancing your portfolio to its original or updated asset allocation, you take steps to lock in gains from the sectors with the best returns and purchase shares in the sectors that have lagged behind last year's leaders.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-43">Pay Down Your Credit Cards</h2>
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<p id="mntl-sc-block_1-0-44">If you owe money on your credit cards, determine how much you can realistically afford to pay off during the year. For best results, try not to charge additional purchases on those cards while you're paying down what you owe. If you have high-interest credit card balances, consider whether it would be more beneficial to pay off those high-interest debts or add to your savings. Another option to consider is transferring your credit card balance to a new card with a lower interest rate or even a 0% promotional rate.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-46">Review Your Credit Report</h2>
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<p id="mntl-sc-block_1-0-47">Make sure that you check your credit report regularly, and take steps to repair any negative aspects. Now that you're entitled to three free credit reports each year, there is no excuse for not reviewing this important document, especially since errors are not uncommon. The official website for requesting your free credit reports is AnnualCreditReport.com.</p>
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<p><strong>Warning: </strong>A poor credit report could adversely affect the amount that you are able to save. The reason: It could result in you paying higher interest rates on loans, thus reducing your disposable income.</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-51">Review Life Insurance and Disability Insurance Needs&nbsp;</h2>
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<p id="mntl-sc-block_1-0-52">As you move through your career, your life insurance and disability insurance needs will continue to change. Give some thought as to how much protection you need, and compare it to the coverage that you may already have through your employer's benefits package.</p>
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<p id="mntl-sc-block_1-0-54">Consider whether you need more or less life insurance and whether your needs would be better satisfied by term or permanent life insurance. Also, review your disability insurance coverage to determine whether the amount you have is adequate.</p>
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<h2 class="wp-block-heading">How Do You Maintain Financial Resolutions?</h2>
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<p>The key is to set realistic targets and remind yourself why you made the resolution when you're tempted to give it up. Transferring money from your checking account to a designated separate savings or investment account that's not easily accessible—or having part of your paycheck automatically deposited in a savings account—can also help to remove any temptation.</p>
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<h2 class="wp-block-heading">How Much Money Can I Put Aside Each Month?</h2>
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<p>That depends on your individual circumstances. Once you work out how much you have coming in and review your spending habits and debts, it should become clearer how much you can reasonably set aside.</p>
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<p>Some expenses, such as a mortgage and utilities, don't allow for much wiggle room, but there are likely to be ways to cut down on others and allocate that money elsewhere. Generally speaking, financial experts recommend saving at least 20% of your income each month.</p>
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<h2 class="wp-block-heading">What Is the 50-20-30 Budget Rule?</h2>
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<p>The 50-20-30 budget rule is a simple guideline designed to help people reach their financial goals. Senator Elizabeth Warren (D-Mass.) popularized the 50-20-30 budget rule in her book <em>All Your Worth: The Ultimate Lifetime Money Plan.</em> According to this rule, 50% of your income should go toward essentials, 20% should be saved, and the remaining 30% allocated to discretionary, non-essential purchases, or "wants."</p>
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<h2 class="wp-block-heading" id="mntl-sc-block_1-0-62">The Bottom Line</h2>
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<p id="mntl-sc-block_1-0-63">Take this opportunity to restate your financial resolutions simply and clearly for the New Year. Be cautious about setting too many or unrealistic financial goals. Otherwise, you may be unable to accomplish any of them.</p>
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<p id="mntl-sc-block_1-0-65">It may be a good idea to maintain a checklist to keep track of how you are doing throughout the year so that you can make any necessary modifications. If you have a financial advisor, consider meeting with them to review the goals that you have set for yourself.</p>
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<p></p>
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<p>To read the full article, <a href="https://www.investopedia.com/articles/pf/06/newyear.asp">click here.</a></p>
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