With the Holidays drawing near and 2023 around the corner, taking stock of your finances and money habits can help you start the New Year off on the right foot. Our everyday, routine money habits can affect our finances more than we think. Good money habits can help you as you save and invest for the future. Bad habits can leave you treading water financially. Let’s take a look at three common bad money habits to avoid in the New Year.
A Savings Strategy
Not saving enough. Instead of paying themselves first, some families pay others first. Dollars they could save and invest are instead spent on consumer goods and services they don’t truly need. Money that could be saved and invested for tomorrow is spent today. Are there areas in your life where you could cut costs?
Carrying too much debt is oftentimes an overlooked expense. Every effort should be made to reduce your total financial debt. Debts such as large credit card bills, student loans, auto loans, and other consumer debts risk diverting money away from the pursuit of your long-range financial objectives. Balance is key when paying off debts and saving for the future.
Timing It Right
Investing too conservatively. Did you know that historically, equity investments offer the potential for double-digit returns when the markets perform well? Fixed-income investments are frequently dependent on interest rates; when interest rates are low, their value is greater. When interest rates increase, these investments are subject to increased loss in value. Accepting some risk in your investment strategy may give you a chance for greater reward.
Are any of these habits slowing your wealth-building momentum? If so, it is never too late to start anew. Building good spending, saving, and investing habits can be only the tip of the iceberg, but with the right resources and wealth advisor, you can tweak your routine habits and begin 2023 with confidence in your finances.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.
This material was prepared by LPL Financial, LLC.