There are different ways to jumpstart your personal finances. Some will tell you the only way to do it is to make more money. Start a business and there’s no ceiling on your income. Others will tell you to live on rice and beans and cut out everything.
The truth is there are lots of ways to jumpstart your personal finances. Starting a business and making a lot more money will work (provided you also save and invest). So will getting a new job or promotion or that pays more.
Since I’m not an expert in entrepreneurship or making more at your job, I’m going to focus on whatever your current personal finance situation is and help make it better. Whether you’re making $50,000 or $500,000 per year, there are things every person can do to jumpstart their personal finances.
Number 1: Assess Your Values
Number one on the list is to assess your values. I often hear advice like:
- Cut out vacations
- Don’t eat out until all debt is paid off
- Eliminate the activity (fill in the blank) that you enjoy
While I think the intentions of advice like this are good, it’s kind of like a financial crash diet. Cutting things out that you enjoy and value may work in the beginning, but eventually it’s not going to. It’s a hard lifestyle to sustain and most people aren’t able to.
A foodie cutting out nice meals isn’t going to work long-term. Nor will completely cutting out travel for someone who loves to see the world.
Rather than going on the financial crash diet, start by assessing your values. It’s an organic process that naturally keeps what you love, and cuts out what you don’t. It’s a process I’ve often referred to as value-based spending.
Decide what you love and need, and keep those things. Anything left over is cut out. This process is fairly painless because you still get to keep things you want to keep, you’re only getting rid of the insignificant and/or unnecessary.
Number 2: Get Realistic With Your Values
Here’s where it gets a little more painful. Not crash financial diet painful, but it’s going to require some follow up with the first tip. In the first tip, you assessed your values and cut out the unimportant.
The second tip to jumpstart your personal finances in 2023 takes your values to a new level. Imagine you are someone who loves two very different experiences: sports and Broadway shows.
You don’t care much about nice restaurants, fancy cars, or traveling to remote parts of the world. Sports and shows are your thing.
Hone in on sports and Broadway shows and decide how you’re going to experience those things on your budget. Someone making a few million a year can afford to see all the games and shows they want. However, not everyone is in that kind of position so some decisions are going to need to be made.
How will you enjoy the things you love? If you’re someone making $40,000 per year (nothing wrong with that by the way), you aren’t going to be able to attend 20 Broadway shows and go to the Super Bowl and NBA Finals every year.
Can you go to five games a year, watch some at home, and others with friends? Will going to one Broadway show every quarter satisfy your appetite? Will picking one premium game every year quench your thirst for sporting events?
Decide how you’re going to do the things you love on your current budget. If it’s not enough, consider ways to increase your income such as a side hustle or making more at your job.
Number 3: Automate
The next tip to jumpstart your personal finances in 2023 is to automate. Automating your money helps in every area of your financial life. You can automate your investments, savings, vacation fun, fun money, etc. The list is endless.
Automation takes the guesswork and monthly effort out of saving money. Once you do the work and start the automation, the work is already done for you–all you need to do is live on what’s left.
Here’s an example of someone who wants to invest 20 percent of their income, save 10 percent, and use 10 percent for travel/vacations. If they make $5,000 per month, they would allocate their money like this:
- $1,000 to investments
- $500 to savings
- $500 to travel
That leaves a balance of $3,000 to be used for all other living expenses. As long as monthly living expenses don’t exceed $3,000 that person is going to be under budget, accumulating wealth, saving for an emergency fund, and having a nice sum of money for travel.
Note: Everyone’s situation is different. $5,000 per month is an even number with easy math so it’s an easy example to illustrate how automation works using 10 percent increments. If you’re not able to save and invest these amounts, start lower and work your way up. Or if you make a lot more than this and want to save and invest more, adjust accordingly.
Number 4: Invest
This is more of a long-term play but it’s also going to jumpstart your personal finances in 2023. If you aren’t already investing, now is a great time to start. No matter how young or how old you are, it’s always a great time to begin investing.
Don’t worry that you should have been investing years ago or that your friends have more investments than you. Just start and take it from where you are today. As the Chinese proverb states: The best time to plant a tree was 20 years ago, the next best time is today.
If you’re already investing, now is the perfect time to increase your investments. For example, if you’ve been investing 10 percent of your income, increase it to 11 percent or more. Someone investing 20 percent would aim to increase it to 21 percent or more. The idea is to keep increasing and improving.
Even though investing is a long-term strategy, it will jumpstart your personal finances because it will change your mindset very quickly. You will think of yourself as an investor and begin to invest more and more.
If you’ve never invested before, it’s satisfying to see your account move from nothing to a few hundred dollars to a few thousand dollars. Nobody is going to retire from a couple months of investing but it will begin to change the way you think, feel, and act around money.
Number 5: Control What You Can Control
The fifth way to jumpstart your personal finances in 2023 is to control what you can control. Anyone who has been online or watched the news over the past few months has seen these headlines:
- Inflation is out of control
- Interest rates are going up
- The stock market is down again
I’m not questioning the truth or validity of these statements. Yes, it’s true that inflation is high right now and the stock market is down for the year. The reality is those things are out of our control. There’s nothing you single-handily can do about it.
All we can control is our own financial behavior and sticking to our plan and goals. Value-based spending works in any economy. So does keeping an emergency fund and investing 20 percent or more of your income. The way you invest may change, but it doesn’t change the fact that you should invest in something.
Over the years, the economy will shift and markets will fluctuate. Things will ebb and flow–there will be highs and lows, ups and downs. Control what you can control, and understand there are no guarantees other than how you respond.
Number 6: Cut Out the Noise and Listen to Wise Advisors
People behave very differently around personal finance. Some people drive a really expensive car and appear rich on the surface. Others love to lecture you that the down markets this year are proof of why you shouldn’t invest. Or that you should sell now and buy back later.
The world is full of “I told you so’s” and Monday morning quarterbacks. It’s easy to be right when the game has already been played. A great way to jumpstart your personal finances to start this year are to cut out the noise and listen to wise advisors.
Pay attention to those who have been there and done that. Those who are successful and have demonstrated long-term success. Avoid listening to the doomsday predictors and friends who have correctly predicted 15 out of the last two recessions.
The reality is that nobody is perfect or batting a thousand. You’re going to be wrong sometimes. The trick is to listen to wise people and make decisions with a higher success probability. Over time, the odds will be stacked in your favor.
Conclusion
You have a choice in 2023 when it comes to your personal finances. You can jumpstart them or keep doing what you’ve always been doing. If you are someone who has been very successful with your personal finances and money decisions, keep doing what you are doing.
But if there is room for improvement, make the necessary changes. Whether it’s a mindset shift, better decision making, or the mechanics of better managing your money–begin making the changes now to pave the road to improvement.
How can you jumpstart your personal finances this year?
