Ready, Set, Goals! Get a Fresh Start on Your Finances in the New Year

By Octavia Wealth Advisors

The start of a new year is always a great time to check in on your financial plan—to consider new goals and strategies, and to make changes if necessary.

This year, due to ongoing inflation and rising interest rates, it may be especially important to revisit your saving, spending and investing plans. There also have been several adjustments to federal tax and retirement rules that could affect your planning going forward.

Here are some things to consider as we move into 2023.


Creating a Realistic Budget

From groceries and gas to car and rent payments—the cost of just about everything went up in 2022. Though inflation numbers are improving, most forecasters expect prices to remain high well into 2023.

When inflation reduces your purchasing power, budgeting becomes more important than ever. By setting realistic limits for each spending category (such as housing, entertainment, transportation, etc.) and monitoring your budget regularly, you can be sure you’re prepared as prices fluctuate. Check out Octavia’s Household Expense Worksheet for help putting together a budget you can stick to in 2023.


Getting More Bang for Your Savings Buck

Don’t forget to pay yourself first this year. Rates on savings accounts have been rising lately, reflecting ongoing increases to the Federal Reserve’s benchmark rates. That’s likely to continue in 2023, which means savers can expect to see a little more than the minimal return they’ve been getting with traditional bank savings accounts.

Choosing a savings vehicle with a higher annual percentage yield (APY)—such as a high-yield savings account, money market savings account, or money market fund—can help boost your earnings. A Schwab Money Market Fund, for example, currently offers yields that are more than 3.5%. (According to Bankrate, the national average for savings accounts is currently 0.2%.)

Establishing an Emergency Fund

As part of your overall savings plan, you also may want to consider starting or adding to your emergency fund. This is money set aside for the unexpected—a temporary job loss, high medical bill, or costly home repair.

Most financial experts recommend stashing away enough to cover around three to six months’ worth of expenses—preferably in an account that’s easily accessible but also offers a higher APY.

Retirement Saving

Retirement saving is a critical part of any financial plan—and there’s good news for savers this year: Federal rule changes are making it easier to build a nest egg in 2023, and to shield more of your money from taxes.

Delaying Required Minimum Distributions (RMDs)

In 2019, the Secure Act delivered the first major modifications to the U.S. retirement system in more than a decade. Now, even more changes are on the way with the new Secure Act 2.0 legislation.

Effective this year, the age when RMDs begin increases from age 72 to age 73—and will increase again, to age 75, in 2033. Also in 2023, several provisions will improve retirement plan options for small employers and their employees.

Maximizing Contributions with Inflation-Adjusted Limits

The IRS adjusts the tax code every year to help mitigate the effect inflation can have on the value of the dollar. These adjustments for 2023, which are based on 2022’s record-setting inflation rates, are more substantial than usual, and they include higher retirement contribution limits for savers of all ages.

For details, you can download our 2023 Retirement Plan Contribution Limits Guide. For additional help evaluating your plan’s performance and its role in your overall savings strategy, connect with your Octavia wealth advisor.

Kick-Starting a Roth Conversion

If you’ve been considering converting to a Roth IRA but have been slow to pull the trigger, you may have added motivation to get a conversion underway this year.

As part of its inflation-related tax code adjustments, the IRS also expanded each of the seven tax brackets by roughly 7% for 2023. So, if you drop into a lower bracket, or find you have extra room in the bracket you’re in, you may want to start your conversion soon. This will give you three years to also take advantage of the already low tax rates put in place by the Tax Cuts and Jobs Act (TCJA), which sunset at the end of 2025.

Need even more incentive? If your traditional IRA’s value drops due to market declines, that too could lower the tax bill for converting to a Roth. As your portfolio recovers, the money you converted to a Roth IRA will now grow tax-free.


If changes put in place by the TCJA have made it difficult to itemize and deduct smaller direct donations on your return in recent years, you may want to consider implementing a more tax-efficient giving strategy in 2023. 

Creating a Donor Advised Fund (DAF)

Establishing a DAF is an increasingly popular way to help worthy organizations while also enjoying a tax break. You can use a DAF to bundle multiple years’ worth of donations into one larger donation (cash and/or assets) that can get you over the TCJA threshold for itemizing charitable deductions. Instead of going directly to a charity, your money is invested by your DAF’s sponsoring organization, where it can grow tax-free, and is then paid out tax-free over time to qualifying causes. So it can be a win-win for donors and charities.

Feel free to reach out to your Octavia wealth advisor for more information on DAFs, to find a reputable DAF sponsoring organization, or to discuss other giving opportunities that could be a fit for your philanthropic goals.

New Year, New Dreams

Ready to get a fresh start on your finances in 2023? Octavia is here to help. Schedule time now so we can discuss your dreams for the future—and the moves that can benefit you and your family as you work to achieve those goals.

Please see Important Disclosures.