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Kick Off the New Year with a Financial Health Check

Kick Off the New Year with a Financial Health Check

January 18, 2023
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After a complicated year, the next dawns with new opportunities. Now is the time to think about the new year and your plan of action. The start of a year is the right time to work on a dream or two. It is also an excellent time to adjust or refine a financial strategy and form healthy financial habits. Regular review of your financial plan with your advisor is critical to confirm you are still aligned with your long-term goals.

Here are a few ways to improve your financial health for 2023:

Review your investments

Taking the time to review your portfolio periodically to assess the status of your assets, and how these are maturing, and to keep an eye on your cash flow is critical. With age, your investment portfolio can change in keeping with your preferred level of risk. At a young age, you may be more open to high-risk, high-return investments. In contrast, you are likely to be more cautious in your 40s when you may have multiple liabilities and cannot afford to take high risks.

We can use our tax-smart approach to financial planning to ascertain the balance of your current portfolio, and where we can adjust.

Review your expenses

Creating and maintaining a budget spreadsheet each month where you record each purchase or outflow from your account is the perfect starting point. While we may wish to follow pre-set spending goals, many people are often unaware of their actual buying habits. By tracking your spending with a spreadsheet, you may find unnecessary expenses or unhealthy spending habits, such as an annual subscription that you no longer use or need.

Harmful spending habits can derail your financial plan quickly. Identifying harmful habits is the first step to a clean bill of financial health!

Review your budget

Reviewing your budget monthly and/or annually will provide valuable insights into how you are spending your money and will help you understand how to revise your budget to meet the financial strategies we set in motion for you.

Assessing your debts and payments is necessary for implementing a realistic budget. As you go through last year’s finances, you will see a clear pattern of spending, investments, and income. These will help in making a more realistic budget, one that you can stick to.

Automate your savings and investments

Automating your savings allows you to avoid spending unnecessarily and ensure sufficient cash flow for savings and investments. This becomes even more important for investments that may not seem significant now but are necessary for the long run. This includes investing in a retirement plan in your 30s or in life insurance when you are young and fit.

You can set up the auto transfers by your payroll cycle to ensure you have sufficient funds in your account and maintain financial discipline.

Review your emergency funds

An emergency fund is intended to provide you with a financial cushion in case of an adverse event, such as a sudden loss of income. It can also include unplanned big expenses, such as major repairs to your car or home. Loss of income or sudden unplanned expenses can not only impact our overall lifestyle, but it can also put affect our financial plan as we fail to make timely payments or are forced to cash in some of our investments to cover expenses.

To avoid overspending from the fund, it is best to place it in a separate savings account, then you will be less tempted to touch it.

The bottom line

Strong financial health has a direct impact on your well-being. It can help you meet your essential and non-essential needs, explore your potential to the full, and allow you to lead a life on your own terms. I encourage you to reach out to our team so we can evaluate your unique financial situation and what your goals are, so we can select the right tax-smart strategy for you. At Paxel Financial, we strive to create a legacy for financial success!