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Four Smart Personal Finance Resolutions for 2023

January 10, 2023

It’s that time of year when many people resolve to create better habits - both personally and professionally. Check out these four easy personal finance resolutions that could benefit you and your family!

1.       GET YOUR TAXES DONE EARLY

To kick start the new year on a good note, plan to get your taxes done early. Getting your taxes done earlier has multiple benefits to your financial wellbeing. Filing your taxes ahead of time can allow for faster refunds and could help prevent processing delays. Early filing can also help alleviate tax deadline stress, as well as provide more time to plan for payment of any balances due. Filers with a balance due on their tax return can file early and then wait until the deadline (April 17th for 2023) to submit their payment - this is a good strategy for those who need to pay bigger balances.

2.       CREATE OR UPDATE YOUR WILL

It is never too early to prepare a Will! Doing so can also be a great tax strategy for minimizing tax penalties and generating unnecessary taxes for your benefactors. There are a few tax strategies to avoid negative tax implications, and one is an accelerated gifting strategy. This strategy can include gifts made before passing, which are below the gift tax threshold and non-taxable for your beneficiary. This would decrease the large lump sum given to a beneficiary after passing, which would be taxable. Another tool is a charitable trust. Charitable trusts are smart financial tools designed to support philanthropic causes, have an impact beyond your lifetime, and create income opportunities along the way. For more information about charitable trusts click here. Besides tax benefits, it might also avoid potential legal issues that may come up as well as decrease the chances of difficult emotional decisions for friends and family.

3.       50/20/30 RULE – SET A BUDGET, REDUCE SPENDING, SAVE MORE

A financially smart way to start the new year is to setup a budget.  A common rule of thumb for budgeting is to divide your income into three categories: 50% for needs, 30% for wants, and 20% for saving and debt payoffs.  Setting up a budget that is consistent from month to month will allow you more control over your finances.  It will help you spend less, save more, and most importantly, could provide the financial security and peace of mind.  One of the most popular budgeting tools out there is Mint.com.  This budgeting software links to all your financial accounts, allowing you to track spending and income in one location.  You can set goals and expense categories that will allow you to see how you are doing financially over time.  But Mint is just one place to look.  There are plenty of useful budgeting tools available to assist.  Take control over your finances in 2023, and you will see how beneficial creating a budget can be both in the short- and long-term.

4.       BOOST YOUR INVESTING EFFORTS AND INVEST IN WAYS THAT MATTER TO YOU

Solid investing strategies can help you successfully reach your retirement goals.  A commitment to investing can be challenging for some as it requires you to focus on the future while perhaps sacrificing some financial excess in the present. Whether you are using a budget to save and invest, taking advantage of your work’s retirement plan, or hiring a financial advisor to manage your investments, investing is a powerful tool that can exponentially grow your wealth over time, however not all investing is created equal.  It is recommended that you find an advisor that takes an evidence-driven approach to investing. One with a special focus on understanding the investment best practices and body of knowledge defined by the last 50-plus years of academic and practitioner research. Investing based on academic research, not the latest guesswork based on what so-called experts “think” might happen (also known as active management). For more information about evidence-driven investing click here.

You might also want to consider investing in companies that align with your values.  There are several solid sustainable investment portfolios available. For more information about sustainable planning and sustainable investing options through our affiliated financial planning firm *Copper Leaf Financial click here.

This is shared as a service to our clients, business associates and friends. Recipients should not act on the information presented without seeking prior professional advice. Additional guidance may be obtained by contacting Davis & Hodgdon CPAs at 802-878-1963 (Williston) or 802-775-7132 (Rutland).

Written by:

Donna London, Supervisor

Jonathan Nadaskay, Associate Accountant II

Sarena Pickells, Senior Accountant I

Resources:

*Copper Leaf Financial is an affiliated and separately registered entity.