8 Financial Decisions You Should Make in 2023

8 Financial Decisions You Should Make in 2023

In Rich Dad Poor Dad, Robert Kiyosaki states that, when it comes to rich people, the biggest difference is not their assets but their financial decisions. They treat things like money, debts, and assets differently than those less affluent.

According to Kiyosaki, if you were to adopt these habits, you would quickly overcome many financial troubles. So, for those willing to turn over a new leaf, here are some financial tips and decisions worth making.

1. Start getting out of debt

Most guides suggest that you should just “get out of debt.” They say it like it’s an easy thing to do. Still, to get somewhere, you need to get started, and 2023 is a great year for you to do so.

There are several things you can do. 

First, you need to put on paper all your debts and calculate how much money you’re losing on credit payments alone. Next, you need to make a loan repayment plan

There are several strategies you could consider:

  • Consolidating debt: This allows you to join all your debts into one. This way, you can lower your interest rate, and it will become a lot easier to handle a single payment monthly.
  • Repaying loans one by one: You have two options: repaying the smallest loan (to cross at least one loan off the list) or repaying the one with the highest interest rate.

Either way, once you have a plan, you should start executing it.

2. Consider investing

Another thing you should do is consider investing. Money is supposed to make money. This is the mindset of the rich and successful, and it might be time to start thinking this way, too. 

You also want to diversify your investments. Stocks are great, but you also want to invest in commodities (keep at least 10-20% of your investment money in gold or silver). 

Another great idea is to invest in real estate. Ideally, you would buy a real estate property, but if you can’t afford this, you can always find a real estate syndication or investment trust. This way, you can pay a lower entry fee to invest in real estate. This also allows you to create a passive stream of income, which is something that we’ll discuss a bit later.

Finally, investing in crypto is a great idea even in 2023. Just look through some of the best cryptocurrencies to invest in today and find a token that you find promising. The investments can be as low as you’re comfortable with.

3. Create a new stream of income

You sometimes need more income to get out of debt or create a surplus in your household budget. Your surplus is your income versus your expenses; with a higher income, it will become harder for your expenses to keep up.

Remote work has revolutionized this field because you no longer have to commute to work part-time. Imagine having four jobs. If you had to commute to each of them, this alone would take several hours off your day (hours that you don’t have). With remote work, this no longer has to be the case.

It doesn’t have to be a job in a conventional sense. The gig economy is stronger than it ever was. Therefore, you can easily find a project that you can complete relatively quickly, grab some extra cash and use it for a one-time passion project.

Just remember that burnout is a real thing. Don’t bite more than you can chew; remember, you are human, which means you have limitations. Overestimating yourself isn’t just egotistical – it can be outright dangerous.

4. Create passive income

While finding a new job is a great idea, the truth is that you can only take so many extra jobs before running out of time/energy. The way around this is to create passive streams of income. 

The most obvious way to do this is to buy a rental property. Still, if you can’t afford this or don’t find this to be the best way, there are other ideas worth considering.

You could buy the equipment you will rent or rent the equipment you already have.

Intellectual property like e-books, online courses, songs, photos, etc., can be uploaded online, and you will get a royalty for every download. The thing is that producing this content takes more time and effort than people expect. Therefore, it’s easy for someone without previous experience in these fields to underestimate it.

Previously, we’ve talked about buying stocks. Well, some stores pay dividends. This, too, is a steady passive income that could supplement your income.

5. Plan for future major events

Weddings are expensive, and so are buying a car, owning a home, going through school, and retiring. The problem is that while most people acknowledge that these are major life-changing decisions, they refuse to see them for what they are – major financial decisions.

You need money for each event; contrary to popular belief, you can plan for them. You can set money on the side, create dedicated accounts, or lead a bit more austere lifestyle in preparation for these events.

The most important advice you’ll receive is to set realistic plans. Let’s face it; you don’t need as big of a wedding, a new car, or a ten-bedroom home. The key to financial health is to figure out how much of a home, car, and wedding you can afford.

Also, while you want to have the money on hand, never be ashamed of negotiating. Sometimes, by just asking, you can seriously lower the price.

6. Start writing everything down

You must start budgeting as soon as possible. Chances are that your financial problems stem from having no idea how much money you’re spending. When you start writing everything down, you’ll get a clearer picture.

Many people avoid this because they believe it’s a lot of work. This is no longer the case in the era of budgeting apps. Connect these apps to your m-banking, credit cards, and PayPal. This means that every single dollar you spend gets automatically noted down. 

You don’t even have to type in cash payments manually. The majority of receipts have QR codes. All you need to do is scan them and have this entered into your budget.

Some of these apps have decent analytical software, allowing you to get a deeper insight into your spending habits. They say that the first step in avoiding a trap lies in knowing there is one to begin with. 

7. Make an emergency fund

The highest cost usually comes from emergency expenses. This is often how people get into debt or embark on the debt spiral. 

However, what if you had an emergency fund? This way, you have an account that you can dip into every time you have this type of emergency. Generally speaking, an emergency fund should consist of at least three months’ worth of your income. If you lose your job, you have a safety net.

There are a few ways you can save for this. For instance, you could gamify the experience with a 52 weeks saving plan or try a similar idea. Also, you don’t have to do this right away. Fill this fund over several months.

8. Conduct regular financial checks 

You need to reassess your financial situation now and then. You can start by:

  • Assessing your monthly income
  • Calculating your average monthly expenses
  • Evaluating your debt situation
  • Checking your credit score

It’s important to make estimates and projections. For instance, plan your next financial check three months from now. Where do you want to be at that point?

You can also approach this via a three-point evaluation principle:

  • What would be the best-case scenario?
  • What would be horrible?
  • What is the most likely to happen?

This way, you also have a frame of reference.

Great financial health is a result of great financial decisions

The key thing to remember is that wealth doesn’t come overnight. So, you need to determine which financial decisions will lead to the best long-term outcome. Your objective for 2023 should be to lay the foundation for your future affluence. With these eight tips on your side, this shouldn’t be too much trouble.

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