7 steps to help you take control of your finances this year

• As interest rates continue to rise, Americans are prioritizing their financial independence. 
• By creating a financial routine, people can save more and stress less. 
• From committing to dollar-cost averaging to slimming down high-interest debt, these steps can help keep you on track. 

In 2023, two-thirds of Americans made a financial resolution for the new year. Rising inflation and increased interest rates have put pressure on people to save more and spend less. And while some Americans want to make big financial moves, like planning a wedding or launching a business, they are uncertain about what's next for the economy. 

Luckily, creating a financial routine can take the anxiety out of money management. Building wealth requires planning and consistency, but taking steps today can benefit you tomorrow. If you're unsure how to move to the next level with your money, check out these ideas to help you reach your new financial goals.

1. Set yourself up for success

Setting strong financial goals upfront can kickstart your journey to success. But building a routine takes some upfront planning. Keep these strategies in mind as you get to work: 

2. Know your (net) worth

With multiple assets and accounts to your name, it can be difficult to maintain a comprehensive view of your finances. But knowing your net worth empowers you to make wiser financial decisions.

Once a month, check in on your net worth by tracking all your balances in one place. Online net worth calculators, like this free one from Empower, enable you to view your net worth in real time. Link your bank accounts, investments, retirement accounts, and other assets to get a more complete view of your finances. 

Keeping an eye on the big picture helps you celebrate your growth — and plan for the future.

3. Create small habits that add up

Recurring tasks and scheduled automations help ensure your finances keep working smoothly. Consider adding these steps to your routine:

4. Capitalize on dollar-cost averaging

Dollar-cost averaging may reduce the guesswork of timing the sometimes-volatile market.

Buying when stocks are down could grant you discounted share prices that potentially produce a profit when the market rebounds. And investing with a long-term lens gives you time to potentially recover from losses if the market dips after you buy.¹

Smooth out the highs and lows — and take the emotion out of investing — with automated contributions, like setting up recurring bank transfers to your investment account and paycheck deductions to your employer's 401(k) plan.

5. Diversify your investments

Volatility can do a number on an unbalanced portfolio. But diversification can often help shield you from extreme losses. After all, downturns in one sector of the economy may coincide with  growth in another.

Assess your diversification strategy by analyzing your current investments. You can even leverage online tools to help you navigate the diversification process. Empower's free investment check-up tool, for instance, can help you assess risk and equip you with alternatives to better diversify your portfolio. 

Staying committed to a diversified strategy and periodically rebalancing your portfolio may help you meet your goals.²

6. Whittle away debt that's holding you back

Not all debt is created equal, according to Empower financial professionals. Some debt, like taking out a mortgage on a house or a student loan to pay, helps consumers achieve specific long-term goals. These debts typically have relatively low interest rates, making repayment manageable for most. 

Bad debt, however, is often accrued from high-interest credit cards, unnecessary personal loans, and predatory payday loans. This type of debt is especially dangerous because it can hold people back from pursuing their financial goals.

Fortunately, you can take steps to minimize bad debt: Pay your monthly minimums and consider eliminating considerable expenses with one of the following accelerated debt repayment strategies:

• Debt avalanche: Consistently put extra cash toward the account with the highest interest rate.
• Debt snowball: Consistently put extra cash toward the account that has the smallest balance.

There's no one-size-fits-all for debt repayment, and how you choose to pay off your debt will depend on a number of factors. A debt payoff calculator can help you determine how each method would impact you.

7. Work with a knowledgeable financial professional

When you need a guide on your journey, consider partnering with a trained financial professional. They'll take the time to understand your goals, current circumstances, and risk profile. From there, they might offer a plan for debt repayment, tax recommendations, portfolio suggestions, and services to keep your money running smoothly.

Managing your money amid economic uncertainty can feel intimidating, no matter how strong your finances. By sticking to smart habits this year, you'll be able to handle your money proactively and gradually progress toward your goals.

CTA: Ready to achieve your financial goals? Talk with an Empower financial professional today.

This post was created by Insider Studios with Empower. 

¹Dollar-cost averaging does not ensure a profit or protect against loss.

²Diversification does not ensure a profit or protect against loss.

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Disclosures:

Any reference to the advisory services refers to either Personal Capital Advisors Corporation ("PCAC") or Empower Advisory Group, LLC ("EAG"). Advisory services are provided for a fee by PCAC or EAG depending on your specific investment advisory services agreement.  Both PCAC and EAG are registered investment advisers with the Securities and Exchange Commission ("SEC") and subsidiaries of Empower Annuity Insurance Company of America. Registration does not imply a certain level of skill or training. Investing involves risk. Past performance is not indicative of future returns. You may lose money. All visuals are illustrative only. Featured individuals are not PCAC or EAG clients. © 2023 Empower Annuity Insurance Company of America. All rights reserved. "EMPOWER" and all associated logos, and product names are trademarks of Empower Annuity Insurance Company of America.

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