Getting your finances in order for 2023
GLOBALLY, the financial odds are generally stacked against women — from the gender pay gap to the unending struggle to balance professional duties and family responsibilities, the financial well-being of women can get lost in the mix of these challenges.
The 2021 Global Findex Database revealed that 74 per cent of men and only 68 per cent of women in developing economies had a bank account (Ansar et al, 2022). While it is not necessarily the responsibility of women to fix the inequalities they face, they should be strategic about their spending, saving and getting their finances in order.
If 2022 did not unfold how you had envisioned it financially, then now is the time to start thinking about your financial game plan for 2023! This includes thinking through what worked or did not work and how you can refine your approach for optimal performance in the new year.
Martina Allen, manager, business banking at VM Building Society, shared some tips on how you can get your finances in order for 2023.
“Creating a financial plan for the new year that includes room for financial emergencies and getting your finances in order is an important way to set a solid financial trajectory that will guide the days and months to come,” Allen said.
What’s in your budget?
Do a thorough review of your 2022 spending while simultaneously creating a realistic budget for 2023.People who review their spending for the previous year have a better baseline to plan for the new year and are better able to budget. Your budget should help you to determine how much money you need to cover your monthly expenses, how much you are spending, and how much you are saving. Ensure to include those irregular expenses such as car insurance, school fees and yearly medical check-ups.
Managing your debts is also an important step to getting your finances in order for 2023. For some people, debt is practical, particularly when purchasing costly assets like a house. However, when our debts become more of a burden than a means to help, that is when problems arise. Create a clear distinction between what you can realistically borrow and what you think you should borrow. Based on her experience Allen advises that a good debt-to-income ratio is 45 per cent of your gross salary, and she considers anything above that ratio as too much debt.
Expect the unexpected
One should also consider preparing for all unexpected spending as a means of getting finances in order. Life is layered with many unforeseen events which means that our financial life can be toppled by all kinds of shocks. Therefore, Allen advises persons to get their insurance needs covered to protect against many of life’s surprising events which can be expensive to manage on our own.
As you forge forward into the new year, start setting aside some finances to safeguard against emergencies. Situations such as large medical expenses and surprise motor vehicle issues can derail the best-made plans.
It is also prudent to assess if your life insurance coverage is sufficient to adequately cover both your debt and dependents’ benefits. You can consider VM Group’s game-changing life insurance plan, offered in partnership with Canopy.
As we move towards a new year your goal should be to manage your debt, plan for financial emergencies, and most importantly, maintain your new year’s financial resolutions.
Here’s to the things that are yet to come, and farewell to things that have passed. Cheers to financial well-being in 2023!