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While you’re putting together your New Year’s Resolutions, why not add a new budget or new investments to the list? Michael Joyce, President of First Merchants Private Wealth Advisors, says coming up with a solid financial plan can go a long way towards starting the year off right.

“Financial planning is all about where you see yourself in the future and making the decisions that will help you get there,” Michael said. “So now is a great time to take stock of your future plans and goals, and to rework your budget or savings strategy to make sure you get there.”

If you find financial planning or budgeting stressful, don’t worry, you’re not alone.

“This is a topic that’s especially stressful for teenagers and young adults,” Michael said. “It can feel overwhelming to find a starting place, especially if building a financial plan isn’t something you’ve done before. But it’s important to remember that everyone starts somewhere – and often, they’re not starting off with a lot of money.”

So if you don’t have a large savings built up, or a chunk of change to drop on investments, don’t sweat it. Those things can come later, Michael said.

One of the easiest ways to begin financial planning for the new year is to come up with some simple goals. How much money do you want to have in savings by this time next year? Are there any large purchases you’d like to make? Do you want to begin dipping your toes into investing, or start contributing to an Individual Retirement Account (IRA)?

These are all good things to help you get started with your 2023 financial plan, but Michael cautioned that it’s also good to think about a few long-term goals – where do you want your finances to be in five years, 10 years – even 20 years? Do you want to own a home, purchase a car, go to college, or retire? These are all things to consider as you begin a new financial plan.

“Think of your finances like a painting,” Michael explained. “Your goals for 2023 are the initial sketch to help you get started – but it’s not the full picture. You have to plan what the finished piece will look like, you have to fill in details, you have to add color and shading. You can’t start the sketch without planning the finished product and finishing the painting wouldn’t be possible without that initial sketch.”

However, the most important thing to do is to start.

“No matter what time of year it is, or what age you are, the best thing to do is start,” he shared. “There’s the old adage that the best time to plant a tree is 20 years ago – but the second-best time is today.”

Once you have your goals – for 2023 and beyond – it’s time to create a strategy to ensure you meet them.

“A lot of folks say, ‘Well, I don’t have enough money to save,’” Michael said. “And I get that – so my advice is the same advice that parents often give their children: Start a piggy bank.”

While the concept may seem childish, it builds the habit of saving – which is an important first step. Once you have the habit down through saving your leftover change, Michael explained, it becomes easier to save larger amounts. And you might be surprised how quickly that spare change adds up.

The next thing is to consider your spending habits and find places where you can cut unnecessary purchases.

“The hackneyed advice is to cut out your latte order,” Michael joked. “But I don’t know that many young people who can afford a latte a day. However, there usually is some small way you can curb your spending. Maybe you can bring your lunch more often, or not get that snack from the vending machine. Maybe you can locate a discount grocer for your pantry staples or start couponing. There’s no clear advice or strategy that applies to everyone – but I encourage you to look and see where that place might be for you, and to try to begin rationalizing your spending. The important thing is to create habits that allow money to grow over time.”

Already have a solid budget or a financial plan? There’s still a lot you can do as the year rolls over.

“The beginning of a new year is always a great time to ‘check in’ on your finances, your budget, and how much progress you’ve made towards your financial goals,” Michael said.

For example, he shared, a new year is a great time to take the pulse on any assets or investments you have, and to re-evaluate your risk tolerance against your goals.

“Managing money is all about making smart decisions,” Michael explained. “And those decisions need to balance your short-term and long-term objectives. Short-term goals, such as building a cash reserve, should involve investments with the least amount of risk; while longer-term goals, such as retirement, can stand up to more risk.”

A new year is also a good opportunity to examine where your savings is going, and how. Do you have an IRA? A 401K? A mutual fund or a 529 plan? Now is a great time to re-examine those accounts, re-allocate money as needed, increase your contribution amount, or choose to invest some of those funds longer term.

“Often, life becomes busy, and we lose focus of what’s important – including our finances, priorities, and future plans,” Michael said. “When a new year rolls around, it also signals that we’re getting another year older – and you don’t want to handle money at 40 the same way you handled it at 19 or 20 -- how we view money should evolve as we grow older. Which is why it can be really important to do these annual check-ins.”

However, the most important thing, Michael said, is to be comfortable talking about your finances.

“The best thing you can do for your financial well-being is to become comfortable with talking about and handling money,” he said. “Don’t be afraid to learn as much as you can and talk about it with people you trust like parents, teachers, or a local banker. Practice saving, practice investing – they’re skills, just like anything else. The more you practice, the better of a foundation you’ll have, and the closer you can get to your goals.”

Talk to your local banker.

Practice your personal finance skills on our resource page.

Please note that this information is not intended or provided to be used as a substitute for the advice of a tax professional. You are encouraged to consult with a licensed tax advisor regarding personal financial decisions.

First Merchants Private Wealth Advisors products are not FDIC insured, are not deposits of First Merchants Bank, are not guaranteed by any federal government agency, and may lose value. Investments are not guaranteed by First Merchants Bank and are not insured by any government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions in this message are solely those of the author and do not necessarily represent those of the organization.