Ask the Experts: 4 Tips to Conquer your 2023 Finances

4 tips for starting 2023 off on the right financial foot

1. Automate your savings

2. Establish a goal-oriented debt pay down plan that considers either highest interest or lowest balance

3. Start saving now for the unexpected

4. Give yourself some grace

Financial coach Andy Manthei explains all of these strategies and more about how to set yourself up for financial success in 2023.

How did you become a financial coach?

I started out as a branch manager and loan officer for a credit union. When I had to deny folks I would refer them to Greenpath Financial Wellness. I saw how much good they were doing for people so I came over to become a financial coach myself.

“I dedicate my time to figuring out how we can reduce stress and reduce sleepless nights for people.”

There’s a huge amount of credit card debt that accumulated over the last 1-1.5 years. I’ve seen increases in credit card debt of up to 14%. Over the last year, a credit union collective reportedly saw a 95% increase in spending on gas and 83% increase in spending on groceries. People need to put all their staples of life on credit cards. It’s a very different type of economic situation going on, but people are trying to make ends meet.

What’s the difference between financial counseling and financial coaching?

Financial counseling is more reactive to a financial emergency. It’s a triage. Coaching is more holistic and proactive. There’s accountability with an action plan, tracking, milestones, etc.

You should find a Financial Counselor if… 

• You’re only making minimum payments

• You’re starting to miss payments

• You can’t pay down debt balances

• You’re really struggling to make your money stretch

You should find a Financial Coach if… 

• You have a long term goal that will take some financial planning but don’t know where to start.

• You need to increase your credit score.

• You know there’s a complicated financial transaction and you need to start learning how to prepare.

• You need to work towards benchmarks like credit score, savings, or other interim steps but not sure how to go about it.

A financial coach is a proactive approach to improve your situation and can be for anyone.

Is buying a home still the American dream?

If you Google it, yes, you still see images of 1950s homeowners, but we see that over the years with the Great Recession, growing student loan debt, and a lot of other things impeding people's ability to buy a home, many millennials and Gen-Z don’t even see homebuying as a viable option. It’s interesting when you look at the psychology behind it, most people want to buy a home even if they feel like it’s out of reach, but over time it’s significantly less for younger generations.

“People want to feel more in control of their situations.”

People are turning to flex work more than ever and there’s the student loan “debt sentence” that are preventing younger generations from being able to make the bigger money moves that seemed more attainable for their parents.

How can we motivate ourselves to put a solid financial plan in place for 2023?

Hope is the biggest driver. You can pay off your medical bills. You can increase your credit score. You can get a job that pays you enough.

“Having a win is a huge confidence booster and a huge motivator.”

When people get closer to a goal, they accelerate reaching that goal, so get a quick win and make progress toward something that you thought you could never do before. People need to feel like they can make progress and that the past doesn’t determine the future.

What if I overspent during the holidays?

Time to make a financial New Year’s resolution. 

“People always make fitness goals, but instead of trimming the fat, let’s trim the debt!”

Start by mapping out everything – all of your credit cards, other debts, the balances of each, and the interest rates on each. Then you can make a plan on how to pay down your debt the fastest. Sometimes people will then go to their bank or credit union and get a personal loan at 8-9% to pay off their store card and credit card balances which might be around 30%, or even higher in some cases.

If in your financial situation you’re stuck making only the minimum payments, then your balances from this holiday season are going to be around next holiday season. Come up with a plan to put as much as possible into your debt pay down as possible. Sometimes looking at the total amount of debt is daunting, but breaking everything down out of one paycheck or one month of expenses can really help see pay down as attainable.

How can I best prepare for the future?

It’s human nature to always underestimate how much we’ll spend, so planning when things are most fresh in your mind with the most recently available data is always best. As you’re assessing your overall finances, you’ll be able to really make the best plan that you can.

Even with a holiday budget, many people don’t think beyond gifts to the food, hosting, wrapping, decorations, etc., so things can easily spiral into spending beyond our expectations. Try to put away $25 per paycheck into a separate savings account as your 2023 holiday fund to get ahead of the holiday spending you already know will happen next year.

How can I structure my finances to best manage my cash flow?

Set up your accounts and your paycheck deposits to automatically transfer some funds into your savings. Psychologically, when money is taken out of your account immediately, we don’t see it as available money to spend. The most successful savers often have multiple automatic savings accounts to manage their various savings goals. 

We do better when we set up automation that minimizes our temptations. In this example, when we see the money hit our checking account, we’re tempted to spend it, however by automating a transfer into a savings account to work toward our goals, we’re minimizing the temptation to use that money.

Any final advice for building a solid 2023 financial plan?

Things might not always turn out perfectly. There are some months you won’t be able to save as much or you won’t hit your target for paying down your debt. Maybe you even need to change your original plan. 

“Give yourself some grace.”

Everyone is just trying to figure it out and each person’s financial situation is different, but we all want the best for ourselves and our families, so the best time to start is now.