BusinessDay

4 Practical things to consider with your finances ahead of 2023

It’s about 40 days until the end of 2022.
This year initially started as a slow and steady ride and then became a fast and furious show. This is that time of year when a lot of people try to rush things, get exasperated in the process, and lose their zeal.

The end of the year is not the end of hope, nor should it be the end of aspiring for bigger things.

If you have not yet accomplished your 2022 financial goals, congratulations.

It means you have more time to do things better and bigger.

It means you have an internal system of holding yourself accountable.

Beyond achieving your goals for 2022, it is critical that you safeguard the resources that you currently have—your income, your mental health, and your ability to earn more money and upskill.

Some Bloomberg economists have issued a warning about the US economy, predicting that the US will likely experience a recession next year.

What affects the US will likely affect the entire world.

What this means is that it’s probably time to take action to protect your finances ahead of the new year.

1. Assess your current financial situation carefully

Without mincing words, you have to be brutally honest with your financial decisions.

Your expenses will likely fall into the “need-to-have” or “nice-to-have” category.

There is no sitting on the fence.

There is no room for sentimental money decisions.

Over the course of a lifetime, a lot of people live to meet the needs or dreams of others. Our career, business, marital, and financial decisions are often based on what other people want for us.

The way to overcome this ownership bind is to always be explicit with yourself about the person (you) or people for whom you are making a decision.

Read also: Nigeria targets 95% financial inclusion by 2024

This applies to your financial decisions as well.

2. Set succinct financial goals for 2023

I would like to buy a car.

I would like to relocate.

I would like to do an MBA.

I would like to build a house or a second house.

I would like to start a business.

I would like to build an emergency fund of $X.

Write your goals out on paper and start working out actionable steps towards achieving them.

3. Take a defensive stance with your cash flow

Hold on to your cash more tightly than ever.

This point is similar to the first point, but this goes beyond being careful with your expenses.

You are not likely to err on the side of frugality.

Be very careful of the investment decisions you make. Quite a number of asset classes have performed badly in 2022. some because of the state of the global economy, and some as a result of mismanagement on the part of the promoters of such investments.

Before you invest going forward, and especially in 2023, get to understand your risk appetite and the risks associated with that particular investment.

Be sure the investment you are considering is age-appropriate for you and be sure the investments align with your goals. An example of misalignment is when you invest your rent in the stock market. You do not have control over what the stock market’s performance will be when you are ready to pay your rent.

4. Maximise your savings

Set up savings accounts that are hard to reach. Deactivate Internet banking on that savings account and refuse to get a debit card on it. You need to be focused on your savings goals as well as keep your money safe for rainy days.

Above all, don’t panic; live in gratitude; and strive to become more knowledgeable about money management.

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