According to a recent study, 68% of Americans said they made no financial progress last year — their financial situation stayed the same in 2022. Last year was a challenging year across the board, as many factors made it tough to get ahead financially.
Some of the most common pitfalls respondents experienced included overpaying in rent, not sticking to a budget, and failing to save for regular expenses or retirement. On top of that, collapses in the stock and crypto markets had people feeling somber about their finances.
Luckily, there’s no better time to turn things around than the start of a new year.
On the surface, a single year of not sticking to a budget might not seem like the end of the world. However, it’s important to avoid letting this become a long-term trend, thanks to inflation.
The current rate of US inflation is hovering around 7%. In a nutshell, this means that the prices for everyday goods are getting 7% more expensive each year. So, if you aren’t making forward progress to keep up with inflation, you’re actually falling behind as the world around you gets more expensive.
But there are a few ways to counterbalance inflation’s effects and right the ship in 2023.
Making 2023 Your Year
One of the best ways an individual can work to improve their financial situation is to work on improving their credit score. This way, when they apply for a mortgage, car loan, or other type of financing, they have a better chance of being approved with a lower interest rate. Even getting approved for a 1% lower rate on your mortgage or car loan can help save thousands in interest over the long run.
A crucial step on the way to improving a credit score is to consistently make payments on credit cards and other forms of debt. Additionally, be sure to keep the ratio of “amount owed” to “total credit limit” as low as possible by paying off credit cards in full every month.
Also, it always helps to practice conscious spending. This means spending freely on things you love, while dramatically reducing spending on things you don’t care about as much. In other words, it’s a way to budget without cutting out the things that mean a lot to you.
There was a lot of adversity in 2022. But, with these tips in mind, you can make 2023 truly feel like a fresh start.
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