5 Ways to Improve Your Finances in 2023
The financial outlook in 2022 isn’t exactly great. According to research from McKinsey, 58% of European consumers are worried about rising prices.
43% are pessimistic about economic recovery. And more than 30% of people have had to dip into their savings to cover day-to-day expenses. And even though the situation is slightly better in the US, it’s safe to say that most people are concerned about their finances in the coming period.
So, if you’re looking for ways to improve your finances in 2023, the following tips will help you have a better year (at least in terms of money).
Create an emergency fund
An essential strategy you must implement to improve your finances in 2023 is to put cash into an emergency fund.
Ideally, the amount you save up should cover all your expenses for 6-12 months. This will give you peace of mind in unforeseen circumstances. Plus, it will allow you to focus on what matters should you find yourself in an emergency — like losing your job or becoming sick.
Yes, thinking about worst-case scenarios isn’t the most positive way to look at life. But preparing for the worst does help you prepare and can minimize the negative impacts of an unfavourable situation, should you find yourself in one.
Track and analyze your financial habits
The second most important thing you can do to improve your finances is to gather insights into how you spend and manage your money.
Whether you track your income and spending manually or use an app like YNAB is entirely up to you. What matters is that you have a clear overview of your monthly expenses and can identify categories where you could minimize your spending.
Moreover, note that with a money-tracking method in place, you can actively start building habits to live below your means, which will allow you to save more and enjoy better financial stability.
Develop passive income streams
You’ll agree that the best way to improve your finances is to make more money. But what if that’s not possible for you career-wise (at least not right now)? Some people choose to invest in the oil industry, by using a reliable trading platform like oil-profit.app/our-partners, whereas others prefer investing in cryptocurrency. One thing you will need to take into consideration when investing in oil is its impact on oil prices and the global economy. However, whatever you choose, it’s worth doing extensive research to ensure you make the right choice.
For instance, students often don’t have enough time to complete all their assignments and keep full-time jobs. Or, young professionals who are still racking up experience might not be able to get a better-paying position without gaining more experience.
In these cases, the best financial decision is to consider ways to develop a couple of passive income streams. This can be anything – creating digital or physical products that you can sell online by spending a limited amount of time per week on admin work. Or you could invest in blue chip stocks that offer reliable returns and maximize your savings.
Or, if you’re not opposed to actively working, you could even start a side hustle that could eventually grow into a full-blown business.
Prioritize paying off debt
The average total debt per UK household in 2021 amounted to £63,528. So, if you’re looking for strategies that will help you improve your financial situation in 2023, one of the best things you can do is focus on paying off some of that debt.
Admittedly, this is easier said than done — especially if you’re already struggling with money. However, prioritizing paying off debt can substantially improve your finances, so it’s well worth strategizing.
Generally, there are two different methods you can employ.
On the one hand, you can pay the smallest debt as fast as possible while paying minimums on other debts. The benefit of this approach is that it will deliver fast results.
On the other hand, you can focus on your biggest and highest interest-rate debts first. This method will give you some sense of control and motivate you to tackle smaller loans just as efficiently.
Whichever of the two strategies you choose is up to you. What matters is that you’re actively working towards getting yourself to a debt-free state as soon as possible.
Develop a budget and stick to it
Finally, if you want to take control of your finances, you’ll have to create a personal budget. No, this does not have to mean severely limiting your spending on everything but the essentials. Rather, it’s about figuring out how much you can afford and actively working to not overspend.
A good rule of thumb is to follow the 50/30/20 rule. This means you’ll allot 50% of your income to needs, 30% to your wants, and 20% to savings.
Of course, whether you’re capable of following such a rule depends on your habits and income. But it’s an excellent start if you’re trying to develop better financial habits in 2023.
In Closing
There you have it, five excellent methods for you to improve your finances in 2023. You’ll find that by following the tips outlined in this article, you’ll find yourself in a much more stable position than you were last year. Plus, thanks to an emergency fund, a personal budget, and some passive income streams, you’ll be set in case of life not going exactly as planned.
