Money Rehab with Nicole Lapin - Financial Resolutions You Can Actually Keep

Episode Date: January 2, 2023

Are you one of the 66% of Americans making a New Year's Resolution for your financial life? If so— welcome to the party. Despite the doom-and-gloom vibe of the economy, 2023 can be the most enriching year yet, *if* you make the right money moves. Nicole breaks down the resolutions you should set— and more importantly, how to keep them.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. it's time for some money rehab. New Year's Eve can be overrated and overhyped for sure. But beyond all that, this holiday is really special. A new year symbolizes new beginnings and fresh starts.

And so there's this collective inspiration that gets us thinking and dreaming about our potential. I'm definitely in my feels a little bit more this New Year's because in this season of new beginnings, Money Rehab is back and I get to be here again with you every single day, which reminds me, welcome back, Money Re rehabbers. With so many of us motivated by the idea of a fresh start, it's really the perfect time to revisit and reset financial goals. So let's make the most of this motivation, shall we? I'm going to share some of the biggest tips you should focus on for 2023 with your money. But before I dig in, a very important reminder, you have to be honest with yourself if you're going to take control of your finances.

It's like going to the gym to get in shape, but lying about how much you can bench press. You're only cheating yourself. So take an unfiltered financial selfie. And trust me, it can even be really fun to get on top of your finances, especially when you start to see the numbers in your bank account ticking up.

So here are five things you should do to get yourself set up for success in 2023. Number one, play the rate game. With interest rate hikes that will likely continue in 2023, it may make financial sense for you to prepay your mortgage, something that can save you a lot of money over time because you'd be trimming the accumulation of interest owed. Essentially, with this move, you slow down the snowball of interest on your mortgage. Prepaying your mortgage will make financial sense for you if your current mortgage rate is higher than the return you would earn through investment vehicles. Because think about it, if the amount you owe the bank is growing at 6%, but the amount you're earning through investments is 4%, you're owing more than you're growing. But for anyone with lower interest rates on their mortgage,

investment returns might actually outpace the mortgage interest rate accumulation, in which case you might want to invest instead of prepay your mortgage. So bottom line, not all debt is created equal and not all investments are created equal, but interest rates are interest rates. So weigh how fast your investments are growing against how fast you're accumulating debt and allocate accordingly. how fast you're accumulating debt and allocate accordingly. Number two, have your own back. I know you want your New Year's vibes to be glamorous and glitter-covered and champagne-soaked,

and sitting down going through your bank statements doesn't really fit in with the glitzy vision. But hey, we check our bank statements so we can enjoy the celebratory moments so that we don't feel guilty when we buy the champagne, right? So go through your bank statements because this is part of the financial selfie I was just talking about. And when you do so, pay extra attention to subscriptions. Maybe you subscribe to something that started as a free trial and then you forgot to cancel it. So now you're paying $9.99 a month on something you don't need. Maybe you have a subscription for a service that you're not going to use in the new year. Maybe you have an annual subscription that's about to renew and you can catch it before the deadline. These are sneaky little costs that add up and they're playing hide and go seek in your bank

account statements. So find them and don't let them ride your coattails in 2023. And while you're at it, make a contingency plan. With inflation top of mind, you should have a pull-in-case of emergency system to trim your expenses. So as you're reviewing your bank statements, ask yourself, what would go first? Come up with an emergency exit plan for your finances

before you need it. Number three, think about consolidating. If you have debt, consider consolidating. In other words, opting into a plan where you're able to smush your various types of debt together into one gigantic loan. This could help you swap varying interest rates on multiple loans, credit lines, or cards for potentially a lower rate on one single loan. Not only can you potentially lower the amount of interest you're accruing, but it could also make your life a lot easier. Reducing the number of loans you carry will help simplify your financial life and ease money stress. Number four, automate your 2023. Yes, technology comes with less than ideal baggage like social

media anxiety, cybercrime, and how our devices somehow listen to us and feed us targeted ads. Those are not the greatest parts of it, but there's a silver lining when it comes to your finances. If you want to set yourself up for the year, you don't have to work at it every single day. You can set up an automated deposit system today that will last you throughout the year and beyond. You could set up an automated sub-savings account to fund a financial project or goal, or you could automate a deposit from your paycheck to go directly into a retirement account or an investment account. So instead of needing to take time every month to make sure you're on track with your financial goals for the year, you can take one afternoon in the beginning of the year to set it and forget it.

Number five, fight back against inflation. After months of inflation, goods cost more, portions are smaller, and bank accounts are likely depleted. To combat that, look into moving your money into a high-yield savings account. The average checking account from traditional banks still yield less than 1%, but the best online checking accounts can yield you up to 5%. So again, the decision is, would you rather earn 5% on your savings account or less than 1%? I'm telling you guys, money is not that complicated.

For today's tip, you can take straight to the bank. And it feels really good to say that again. When you look to your future and your new year, new you self, don't lose track of who you are and where you are now. I do see it happen all the time. People make these financial goals for themselves with blinders on. Any goals you make around this time should first and foremost be realistic. One of the most common issues with setting resolutions

is making a promise to yourself that's too hard, if not impossible to keep. Be realistic, be specific, and let's make 2023 the year we get it together and get it all. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Our executive producer is Morgan Lavoie. Do you need some money rehab? And let's be honest, we all do. So email us your money questions at moneyrehabatmoneynewsnetwork.com to have your question answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. Seriously, thank you for

listening and investing in yourself, which is the most important investment you can make.