Long-term financial planning: Ring in 2023 with renewed financial goals

A new year brings new beginnings. Whether you're looking to start a new career, spend more time with family, find new opportunities to volunteer in your community or simply take your financial goals more seriously, it's the perfect time to start with a fresh approach.

You may have a few long-term financial planning resolutions around your money—most people do! Making meaningful changes can help better align your financial vision with your values. But sometimes, getting started can feel overwhelming, especially when it comes to financial resolutions.

Fortunately, being mindful, giving yourself grace and focusing on small, incremental steps over a year can yield big results.

Here are four financial goals to consider implementing in the new year and several financial planning tips that could help you along the way.

Consistently save for retirement

Pay down your debt

Build an emergency fund

Set your financial goals & priorities

According to Thrivent's 2022 Retirement Readiness Survey¹, 39% of retirees worry they didn't save enough money. If you haven't been able to prioritize your retirement savings in the past, it's important to start. Even if you feel behind now, you still can take steps toward securing the retirement you envision. Positive changes today can make a big difference in a year's time.

One way to do that is by prioritizing contributions to your retirement accounts. Remember, the power of compound interest means even a small increase in your monthly contributions could potentially lead to thousands of additional dollars in your retirement accounts down the road.

• Contribute with an end goal in mind. Dream big for the future you want with your loved ones, and use that to help motivate you to stick to your plan. If you decide you can live on less after retiring, the excess money can be put toward funding important causes and supporting loved ones.

• Set guideposts along the way. Financial planning is a marathon, not a sprint. Accordingly, your goals may change as you age. Allow yourself to celebrate wins as you meet milestones during your journey, and don't hesitate to reset your expectations as time goes on.

• Review your accounts regularly. Set a time to go over your employer-sponsored retirement plan, any individual retirement accounts (IRAs) and any other retirement savings accounts you hold. Do a progress check using a retirement income calculator for a rough idea of where you stand and identify changes in contributions you may need to make.

• Take advantage of employer matching. If your employer matches contributions from your employer-sponsored retirement plan, use that free money to help boost your retirement savings. If you don't take full advantage, you're leaving money on the table.

Ask any financial advisor for guidance on the most important financial planning strategies, and paying down debt is generally high on the list. Debt takes many forms, but for most people, it can include:

• A mortgage
• A car loan
• Student loans
• Credit card bills
• Personal loans
• Medical debt

Debt can contribute to financial stress, which may impact your family and loved ones. So it's a common new year financial goal many people want to focus on. Making an aggressive plan to begin tackling debt is a great way to get started.

• Add up your debt. This can feel like a daunting undertaking, but knowing where you stand means you're in a place where you can begin moving forward.

• Make easy cuts. See where you may be able to cut expenses or add a side gig to contribute more to your debt payment goals. Even an additional $50 a month can make a significant difference over a year.

• Set specific targets. You might want to prioritize paying down your high-interest debts first and consolidating other loans to make paying them down easier. Or you may be interested in the snowball method of paying off debt. With this plan, you begin tackling debt by first paying off the smallest bills and slowly gaining momentum. This snowball debt calculator can help you understand how it works.

• Consider transferring a balance. Review your interest rates on credit cards and other outstanding loans. You may want to transfer if you find something lower. But make sure any transfer rates don't set you back even further.

Thrivent's 2022 Consumer Financial Outlook Survey² found that 60% of Americans would be concerned if faced with an unexpected $500 expense. The percentage is even higher for those feeling off-track financially. An unexpected bill or job loss can be devastating for those who are already struggling to make ends meet.

While it's challenging to know exactly when the unpredicted will strike, it's important to be prepared.

One way to do that is by building an emergency fund. An emergency fund is a reserve of cash that's easily accessible and can help with unplanned expenses or financial emergencies. Many experts suggest saving three to six months of expenses in your fund to cover significant costs, such as food and housing.

• Review your budget. Determine how much you can comfortably set aside each pay period.

• Set a goal. Identify a target savings amount. It's fine to start small, such as $500 or a month of expenses, and build from there.

• Automate deposits. Review your options for automatically pulling money from your checking to a separate emergency fund, so you don't have to think about it.

• Prioritize saving. If you get unexpected money, such as a raise or bonus work, aim to set some aside for your emergency fund.

Have you taken a step back and thought about some of your long-term financial goals? What about your short-term goals?

Some common goals include:

• Saving for your children or grandchildren to go to college
• Buying a home in the next few years
• Taking a special anniversary trip or family vacation
• Increasing your charitable donations

Once you've identified the goals you're working toward, the next step is setting achievable ways to help you reach them. Understanding what you spend your money on is a foundational step toward improving your overall finances and an essential strategy for financial planning. Knowing where you'd like your money to go and how it supports your values can help you determine your priorities.

• Establish a budget. Review your income, savings and spending along with your financial goals. Your budget doesn't need to be restrictive, but it can lead to eye-opening moments that help you realize what you're spending on non-value-add expenses.

• Pay yourself first. The "pay yourself first" method has you put a portion of your paycheck into your savings into goal-based savings accounts before you do anything else with it. The concept is meant to help you invest in your future self. For example, if it's important to you to save for retirement and save for a down payment on a house, make sure you are prioritizing dedicated funds to both of those goals.

• Automate. Set up automations with your savings and bill payments so you don't have to worry about missing a payment or getting off-track.

Paying attention to goals and thoughtfully choosing to put your money toward what you truly value in life can allow you to stay on track and feel more confident about your future long-term financial planning. It takes a great deal of discipline, but it's entirely possible.

If you're ready to set your new year financial goals, speak to a Thrivent financial advisor for guidance.