Money Moves To Make In 2023

By Kyle Thompson, MBA, CEPA

Since the New Year is a time where many of us focus on personal growth and improvement in many areas of life, the first quarter of the year is the time when I get the most inquiries from prospective clients. The first half of this post focuses on the most basic things in our financial lives that move the needle the most. The second half has an advanced checklist of all the things a (good) financial advisor would be thinking about once everything else is in place. That list is… long. So feel free to download and peruse on your own time.

Since pretty much none of us are taught much about personal finance, and there are tons of sources of terrible advice out there (looking at you, TikTok), taking steps to fix the following 5 things will make the biggest difference in your life-

  • Go back and look at all of your spending in the last year, and try to categorize those things into Fixed and Variable expenses. Then create a goal budget for this year that is in line with your values and goals. Contrary to what most Boomers try to tell you, your coffee and avocado toast is probably not the thing breaking the budget (also, I don’t know anyone that actually eats avocado toast regularly). The first thing to look at is your Housing and Transportation expenses; those two make up the largest part of most people’s spending. If they make up more than 25-35% of your gross household income, that is probably the first place to downsize. Higher income households should be on the lower end of that range.
  • Keep an emergency fund of 2-3 months worth of expenses. There are a lot of personal finance gurus that advocate more than this, but what are the chances of you going more than 3 months with ZERO income? Even if you are laid off from your job, you will get unemployment benefits, which makes a big difference. However, if you are a business owner or work in a commission based field (like realtors), you probably want more like 3-6 months.
  • Make sure you are properly covered with insurance. This is boring as hell, I know. But insurance is what protects you from catastrophic losses, and is an important part of a financial plan. You need to make sure your renter’s/homeowner’s insurance is up to date, and check what your health insurance actually covers, along with any deductibles and out of pocket maximums. You also need a baseline of life insurance (at least 5x income, preferably 10x or more for young professionals), because even if you don’t have any dependents now, by the time you do it will be much more expensive to get the coverage. Lastly, make sure you have umbrella liability coverage, because not only does that cover anything your property and casualty policies don’t, it is generally cheap as hell.
  • Pay off all your credit card and consumer debt and start saving more for retirement. Generally, most of the people that come to me want to retire at age 60 or so, which requires a savings rate of 15-20% of gross income. There are three different tax buckets available to you (pretax, post-tax/Roth, and taxable), and you should be diversifying your investments across those buckets.
  • Finally, the shameless self promotion- hire a financial planner. It doesn’t have to be me, but we spend all day working through client situations and looking for areas to add value that you might otherwise miss. Contrary to popular belief, not all advisors serve clients that are already wealthy; some of us believe it is our job to help you build your wealth. We all have different niches, and I mostly work with Millennials (if you were born between ’81 and ’96, that’s you) that are on track to be our generation’s equivalent of the Millionaire Next Door. If that sounds like you, you can schedule a consultation here. Oh, and my other qualification is that you can’t be an asshole. Those people aren’t fun to work with.

If you have the above things covered, below is a non-exhaustive list of things to think about and plan for the year. I could make this post an even bigger wall of text, but no one wants that. So just download the list and look at it on your own time. There’s no catch here; I am way too dumb at marketing to figure out who downloaded it and retarget them with ads. Just enjoy the free download.

This article is for information and entertainment purposes only, and does not constitute investment advice. Kyle Thompson, MBA is the founder of Leetown Advisors, a fee-only financial planning and asset management firm. For further inquiries or suggestions, please email Kyle at kylet@leetownadvisors.com.

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