It may be time to rethink your budget.
- Making changes to your spending could get you closer to your financial goals.
- It could also help you avoid financial stress.
- Ask yourself how much money you can save and how much progress you’re making on financial goals to determine whether you need to change your spending habits next year.
The start of a new year is a popular time to assess your financial habits. And you may decide that 2023 is the year you’ll finally start following a budget and being more mindful of where your money goes.
But should you change your spending habits in 2023? Or are you okay to keep things as they are right now? Ask yourself these questions to find out.
1. Am I able to save money on a monthly basis?
You need savings for different things — emergencies and retirement, to name a couple. If your current spending allows you to pump money into your savings account each month and also make IRA or 401(k) contributions, then it’s a sign you’re in pretty good shape. And in that case, you may not need to cut your spending. But if you can’t remember the last time you managed to save more than $10, it’s probably time for some changes.
2. Am I making headway on major goals, like buying a home?
You may have certain financial goals you’re hoping to achieve in the next few years, like buying a home or even starting a business. If you feel you’re making good progress toward those goals, then you may not need to make any spending changes. But if your efforts seem to have stalled, then it could pay to rethink some of your expenses.
3. Am I stressed about money frequently?
Some people lose sleep over money matters on a regular basis. If that sounds like you, it’s a pretty clear sign you’ll need to take a closer look at your spending and potentially find ways to cut back on expenses. Similarly, if you find yourself getting nervous every time a bill arrives in the mail or pops up in your inbox, it’s a sign you may have too many expenses.
4. Do I manage to mostly pay off my credit cards in full every month?
Carrying a credit card balance forward means losing money to interest. If that’s something you rarely do, then you may be okay to stick to your current budget. But if you don’t manage to pay off your credit cards in full most months, then it’s probably time to adjust your spending accordingly.
How to make helpful changes in 2023
You may come to the conclusion that you should change your spending habits in 2023. In that case, a good way to go about that is to first break down your expenses into two categories — essentials and non-essentials. From there, you can look at the latter category and order those expenses by priority.
If your current list of non-essentials includes three takeout meals a week, two streaming services, and an $80 monthly tab for rideshares, you can think about which of those things is least important to you and aim to cut back. Or, you can cut back in each area to a reasonable degree. In this example, that could mean ordering takeout once a week, cutting back to one streaming service, and skipping rideshares unless there’s a public transit strike or you’re looking to avoid a massive downpour.
Making changes to your spending could have a positive impact on your financial outlook in 2023. It pays to do what you can to get to that better place.
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