There's no doubt about it — 2022 has been a tumultuous year
for the financial markets. If you are looking forward to a fresh
start this year, why not begin with your personal finances?
Here are some tips to help you get started.
One way to start the year off right financially is to examine your
budget. First, identify your income and expenses. Next, add
each of them up and compare the two totals to make sure you
are spending less than you earn. Hopefully you've been able to
stay the course during the pandemic and your budget is still
on track. If you find that your expenses outweigh your income,
you'll need to make some adjustments. For example, if you've
experienced a loss or reduction in income during the year, you
may need to cut back on certain discretionary spending (e.g.,
online shopping, take-out) or look for ways to lower your fixed
costs, which may require more significant changes.
Once you have a solid budget in place, it's important to stick
with it. And while straying from your budget from time to time
is normal, there are some ways to help make working within
your budget a bit easier:
- Make budgeting a part of your daily routine
- Build occasional rewards into your budget
- Evaluate your budget on a regular basis and make changes
when necessary
- Use budgeting software/apps to help analyze saving and
spending patterns
While the market downturn may have sidelined or stalled some
of your financial goals, now is a good time to regain your focus.
Take a look at the financial goals you set for yourself last year.
Perhaps you wanted to increase your emergency fund or save
money for a down payment on a home. Maybe you wanted to
invest more money towards your retirement? Do you have any
goals you would like to achieve in 2023?
It is a good idea to memorialize these goals in writing and then
check your progress regularly throughout the year. Finally, if
your personal or financial circumstances changed, will you
need to reprioritize your goals?
Despite the pandemic, the U.S. stock market ended 2021 at an
all-time high-but has now declined significantly from that level
in 2022. Despite the stress market downturns can often elicit,
it is usually a good time to contribute more when markets are
down. When evaluating your investment portfolio, you'll want
to ask yourself the following questions:
- Do I still have the same time horizon for investing as I did
last year or prior to the market downturn?
- Has my tolerance for risk changed?
- Do I currently have an increased need for liquidity?
- Does any investment now represent too large (or too
small) a part of my portfolio?
Rebalancing your portfolio at least annually can ensure that
your asset allocation remains in line with your long-term
financial goals.
Reducing debt is part of any healthy financial plan. Whether
you have student loan debt, an auto loan, and/or credit
card balances, you'll want to try to pay it down as quickly
as possible. Start by tracking all of your balances and being
mindful of interest rates and hidden fees. Next, optimize your
repayments by paying off any high-interest debt first and/or
taking advantage of debt consolidation/refinancing programs.
If an event in your life has made it difficult for you to pay down
your debt, you may want to contact your lenders to see if they
offer financial assistance. Many lenders may be willing to work
with you by waiving interest and certain fees or allowing you
to delay, adjust, or even skip some payments.
If you have not worked with a financial professional before
and are finding it difficult to navigate the many facets of your
financial life, you may want to consider engaging with one.
Our team at CNB Wealth Management is always standing by,
ready to help you with any financial questions or concerns you
may have. Most importantly, we wish you all the best in 2023.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Laurie Haelen.
This material is provided for general information purposes only. Investments and insurance products are not FDIC insured, not bank deposits, not obligations of, or guaranteed by Canandaigua National Bank & Trust or any of its affiliates. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please consult your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.