It’s time to start thinking about 2023, which won’t be so difficult given our collective zeal to forget about 2022. If you’re like most people, you’ll set a whole array of financial goals that are too ambitious, so by the end of January you will have abandoned your good intentions. Rather than fall into that trap, set one or two goals that you can attain with some, but not gargantuan effort early next year. Once you begin to succeed with them, you can move on to some others.
There’s no rule that says financial resolutions need to be made at this time of the year, although the commencement of a new year is a natural time to make a worthwhile change or two in your financial life. What’s more important is to regularly take some small steps that over time can improve your financial wellbeing, like foregoing the daily designer coffee that easily costs you over a thousand dollars a year. If that’s too draconian, look for other ways to reduce your day-to-day spending. While controlling your spending is important, other financial goals are equally important like getting a will or making sure your will is up to date.
Smart Money Tips
- All workers qualify for IRA contributions. A lot of people think they don’t qualify for an IRA contribution because they participate in retirement savings plans at work. Wrong. True, they may not qualify for a tax-deductible IRA or a Roth IRA, but at a minimum, anyone with job-related income or a spouse of someone with job income can contribute to a nondeductible IRA. Even people over age 72 who are still working (and their spouses) qualify for IRA contributions. The reason I bring this up is that, while participating in retirement savings plans at work is a great start, you need to save more than that to provide sufficient retirement income. Therefore, contributing regularly to an IRA throughout your working lif is in most instances icing on the retirement income cake. The deadline for a 2022 IRA contribution is April 17, 2023.
- Retiree enemy #1 – overspending. The way you spend your money in the first few years of retirement will dictate how you will fare financially for the rest of your life. Why? Because in my experience once retirees get used to spending a certain amount, it’s awfully hard to cut back later until they’re forced to because they have spent all or most of their retirement savings. To avoid this potential calamity, carefully prepare a retirement spending budget well before you retire, taking into consideration big-ticket items that inevitably arise, like cars, home repairs, and costly dental work. This budget should assume that in the first couple of years of retirement you withdraw only about 4% per year of your retirement savings. Then, when you retire, live within your budget, because overspending will probably lead to big problems later.
Best Wishes for the New Year
And Here’s Hoping It’s a Better One
Food for Thought
People are happier at Yuletime because they take the milk of human kindness out of the deep freeze.
–Arnold Glasow
Money Can Be Funny
May all your troubles last as long as your New Year’s resolutions!
-Joey Adams
Word of the Week
qualtagh (KWAHL-tuhk) – The first person to enter a house on New Year’s Day.
Origin: From the Manx quaaltagh meaning “someone who meets or is met.” The word quaail means “meeting”
A light-haired male or female is deemed unlucky to be a first-foot or qualtagh on New Year’s morning.