The Pulse

Managing Your Money And Setting Yourself Up For Success In 2023

Follow these financial tips for a financially successful 2023

Bluestone Bank’s First Senior Vice President & Senior Wealth Management Officer, Bob Peixoto, has put together his top financial tips for 2023.

1.) Consider a Roth IRA Conversion

Traditional IRA balances have fallen due to the market being down. However, this may be an excellent time to convert some traditional funds to a Roth IRA. This will allow you to pay taxes on the reduced amount, resulting in your Roth investments growing tax-free.

2.) Invest in US Treasury Bills

Treasury Bills have maturities of one year or less and are highly liquid. They are yielding between 4% and 4.5% at this time, making them very competitive with other kinds of high-yield accounts, which may tie up funds for much longer than one year.

3.) Open a High Yield Money Market

High-yield money markets and savings accounts are liquid and can be opened at many banks and credit unions across the country. Their rates may be less than the T-Bills, but funds can usually be deposited and withdrawn with no penalties. Minimum balances may apply.

4.) Open a Retirement Account for your Small Business

Many small business owners must realize they can still open retirement accounts for themselves and their employees. SEP IRAs and SIMPLE IRAs are very popular amongst small business owners. These retirement accounts can help owners maximize their retirement savings while also deferring taxes on earnings.

5.) Maximize IRA Contributions

IRA contribution limits have been increased to $6,500 for 2023 ($7,500 for those age 50 and older) and $22,500 for qualified retirement plans ($30,000 catch-up.) Maximizing your contributions to your retirement accounts makes sense if you have sufficient earnings.

6.) Make Additional Debt Payments and Consolidate Debt

It is essential to understand how minimum payments affect your debt. You can make additional payments, pay off high-interest-rate debt first, and consolidate your loans.

7.) Pay Attention to Retirement and Tax Changes

There are a few changes to retirement rules and taxes for 2023. The RMD beginning age has been changed to 73 years old, so anyone born in 1950 or earlier must take an RMD for 2023. IRA contribution limits have also been increased. (See tip 6.)

8.) Keep an Eye on Spending During Inflation

With inflation still rising, paying attention to where you spend most of your monthly income is important. Take stock of your automatic payments to subscriptions (like streaming services, gym memberships, etc.,) especially those you may have forgotten about or don’t utilize anymore. Canceling a $15/month subscription that may have slipped through the cracks would save you almost $200 for the year!

9.) Prepare for Student Loan Repayment to Begin

Student loan debt repayment has been delayed to an unspecified date in 2023. If courts resolve lawsuits by 6/30/23, then repayment will begin 60 days after that. We advise you to begin making preparations for repaying your student loans this year as soon as possible.

10.) Meet with a Financial Advisor

An investment professional can help you review the savings and strategies you already have and help you plan for the future. Even if you have no new funds to invest, a check-up on your current financial situation can be immensely helpful, especially in times of the market downturn.