Heading into 2023, it’s time to take stock of your budget, debt and investments—and check them against your financial goals. These six steps can get you started.
The start of a new year offers an opportunity to reflect on the past and set goals for the future. Revisiting both your personal and financial goals can help set you up for success in 2023 and beyond.
Here are six ways to kick off the new year with fresh a perspective:
1. Revisit Your Household Budget
Start the year by revisiting your budget. Assess your average monthly income, as well as your fixed and variable expenses, and determine your financial priorities for 2023 to develop the ideal budget for you. Reassessing your budget may be especially valuable now, as high inflation forces many households to allocate more for essentials like groceries or gas.
Having trouble getting started? Morgan Stanley’s financial management tools, available on Morgan Stanley Online, can help you track income and expenses and create custom budgets to optimize how you put your money to work. If you haven’t enrolled in Morgan Stanley Online, visit morganstanley.com/online to register or speak to your Financial Advisor to help get you started.
2. Check Your Emergency Fund
It’s always a good idea to double-check that you have adequate funds set aside for a rainy day—but that’s especially true in times when the economy may be slowing from its once robust pace. Morgan Stanley’s economics team forecasts year-over-year U.S. GDP growth to remain flat in the fourth quarter of 2022 and to increase just 0.5% in 2023,1 down sharply from 5.7% in 2021.
Not only can an emergency fund help you to avoid liquidating portfolio assets at potentially depressed prices during periods of market volatility, it can also help keep you financially afloat in unforeseen life circumstances, such as a change in your or a loved one’s employment situation. A general rule-of-thumb for an emergency fund is saving three to six months’ worth of living expenses in a safe, liquid account.
3. Tackle Your Debt
Even if you’re already good about managing debt, consider taking steps to help reduce and consolidate it further. For example, if you’re expecting a raise or year-end bonus, consider applying the extra income to any balances with high interest rates.
Then, think about consolidating any remaining debt, which may help you swap a varying interest rates on multiple loans, credit lines or cards, for a potentially lower rate on a single loan. Reducing the number of loans you carry can also help simplify your financial life and ease money stress. You may want to ask your Financial Advisor about possible strategies.
4. Prioritize Your Wellness
The pandemic may no longer be weighing as heavily on some people’s minds as it once did: According to Morgan Stanley’s 2022 Investor Pulse Poll, a lower percentage of survey respondents (37%) reported that their emotional health had suffered due to the pandemic in 2022, down from 43% in 2021.
The new year can be an opportunity to continue prioritizing your personal and financial wellness. Consider taking advantage of any employer wellness resources for physical, mental or financial health. Many companies offer financial-education programs and digital learning tools, which can supplement the advice you receive from a Financial Advisor. Using these tools can help you not only bring a sharper version of yourself to the job, but also set you up to make better use of other workplace benefits, such as a retirement plan, equity compensation or group insurance, if available.
5. Make Sure You’re on Track With Your Goals
Be sure to check whether you’re still tracking toward your goals, such as saving and investing for a comfortable retirement. If the recent bear market or other factors have temporarily thrown you off course, work with your Financial Advisor to figure out how you can get back on the right path.
Or, if you’re still on track with your goals, talk with your Financial Advisor about new goals you want to work toward. For example, in 2022, were you able to boost your contributions to a workplace retirement plan or individual retirement account? In 2023, can you contribute even more to these or other accounts? Your Morgan Stanley Financial Advisor can help you look holistically at the year ahead and assess your progress towards your goals.
6. Consider Investing in Ways that Matter to You
Morgan Stanley’s 2022 Investor Pulse Poll also reported that 71% of all respondents say it’s important that their portfolio aligns with their values, beliefs and issues that matter to them—yet only 44% believe it’s currently happening. Not only that, 66% of all respondents express a desire for companies they invest in to have policies in place to promote diversity, equity and inclusion.
Whether you’re interested in enhancing diversity at companies, tackling climate change, helping to alleviate poverty or pursuing other causes, your Morgan Stanley Financial Advisor can help you find opportunities to align your investments with your values. In 2023, consider adding more impact to your investments while also potentially generating positive financial returns.
Connect with your Morgan Stanley Financial Advisor to discuss your financial goals for 2023 and more.