Financially Preparing for the Year Ahead
It’s almost time to wrap up our 2022 calendars, and with a new year upon us, it’s a good time to reflect on the past year and prepare for the new one. This time of year can be a great opportunity to assess what happened in your personal life, career, and finances.
There are bound to be some surprises that will occur in 2023. Experts warn that the year ahead may bring more uncertainty. However, having more confidence in your finances can help you manage your situation.
There are two major considerations to take into account when thinking about finances in 2023.
Prepare for Inflation & Higher Interest Rates to Continue
The rising cost of things has made it more difficult to keep track of expenses each month and stick to a budget. In fact, the rate of inflation hit its highest level in more than 40 years, causing many Americans to rely more on their credit cards.
As you think about your finances in the coming years, it’s important to remember that carrying too much credit card debt can negatively affect your financial situation. Limiting credit card usage as much as possible is crucial.
In 2023 prepare for higher inflation to become the new normal.
Stay Invested
The stock market is one of the most important factors you must consider when planning your retirement. In 2022, for instance, the S&P 500, a major US stock market benchmark, experienced its worst six-month period in over 50 years. It then fell into a bear market, which is a decline of 20% or more.
According to David Tilley, an investment consultant, the market’s decline was largely due to investors’ complacency following a three-year run of solid gains. Despite his optimism that the stock market will recover in the year ahead, he noted that uncertainty about the economy remains a major factor that affects financial markets.
Despite the market’s decline, history has shown that the stock market tends to recover in the year following a midterm election.
Even though the market may move up and down, it’s still important to keep investing to reach your long-term goals. Periods of volatility can provide investors with great opportunities to acquire stocks at low prices.
Originally published on Scott Wolfrum's website.
