Wealth advisors offer money tips they’re sharing with their clients for 2023

1. Autumn K. Campbell, CFP®: Focus on the basics

With so much uncertainty going into the new year it could be a good opportunity to focus on the basic concepts of your financial plan. One of those fundamental concepts would include your emergency fund. 

“The more uncertainty or planned change you have in your life over the coming year and the number of income sources you have will directly impact the recommended size of your emergency fund,” says Autumn K. Campbell, certified financial planner and lead planner at Facet Wealth. While three to six months of your monthly expenses tends to be the default rule of thumb, three to nine months may be more appropriate to account for the impacts of inflation and increased layoffs in certain sectors of the economy.

In addition to evaluating the strength of your emergency fund, Campbell is recommending to her clients to prioritize and optimize. If you’re unable to reach all of your financial goals, consider making adjustments. “We frequently find that people want to save linearly for their long term goals, but that can compromise your ability to reach your short term goals more than you realize,” says Campbell.  “It is very common for us to advise clients to lower their savings for their long term goals to be able to save for their short term goals in the timelines that make sense.”  

2. Cody Garrett, CFP®: Align your expectations

Although most investors hope that 2023 comes with lower inflation and a rising stock market, it is important to keep your expectations in check. “We should align our investments’ risk and return expectations with when we expect to need the money,” says Cody Garrett, financial planner and owner of Measure Twice Financial. 

Taking on too much risk in the market can be costly, especially if you need the money in the short-term. “I encourage clients to keep money expected to be spent within the next three years out of the stock market with an investment objective of stability and liquidity rather than growth and income,” Garrett adds.

While investing may typically dominate the day-to-day news cycle, there are other aspects of your finances that should be aligned and evaluated as well. “I encourage families to review their comprehensive financial ecosystem annually,” says Garrett. “Since income, expenses, savings, investments, insurance, and taxes are interrelated, we need to put the pieces together to visualize the whole picture.” By looking at your financial situation comprehensively you can have clarity about where you are and be in a better position to make well-informed decisions moving forward. 

3. Brenton Harrison, CFP®: Be greedy when others are fearful

From rising interest rates, fluctuations in oil prices, and international conflicts, 2022 was marked as a year of volatility in the market. Despite this market volatility, savvy investors can take advantage. 

“If planned appropriately, periods of broader economic fear can be a springboard for financial growth,” says Brenton Harrison, certified financial planner at New Money New Problems. “It’s all about making sure you’re ready when the fears of others present opportunities for those who are prepared to take advantage of them.”

2023 may also be a good opportunity to focus on protecting against broader economic risks as well. The Federal Reserve anticipates a slight increase in unemployment next year as the central bank continues to raise rates. “We’ve seen massive layoffs in the tech industry—which prior to now, was seen as untouchable. That could be a harbinger of instability in the broader economy,” Harrison adds. “Place a renewed emphasis on the fundamentals: maintaining cash reserves, eliminating consumer debt, and investing with consistency.” 

4. Lauryn Williams, CFP®: Don’t panic, stick to the plan

Investors may be tempted to make drastic moves when they see sudden shifts in the market, but it may be best to stick with your plan with small adjustments along the way. “If you have created a financial plan, it should accommodate small changes that are life based, but making big changes based on how the environment feels is not advisable,” says Lauryn Williams, certified financial planner at Worth Winning, a financial planning firm based out of Dallas, TX. 

Sticking to the plan can also include your reactions to stock market volatility. The S&P 500 was down about 14% through the first 11 months of 2022. “The market may not improve for quite awhile but if you have 20 years until retirement don’t panic. Stay the course with your investment contributions and your future self will thank you.”

Williams is also advising her clients to combat inflation by asking for a raise. “Ask for a raise but don’t freak out if you don’t get one. Everyone is being impacted by inflation and increasing income is the easiest way to cope,” she says. Another way to combat inflation is by switching jobs. According to a July Pew Research Center study 60% of individuals who moved to a new employer saw an increase in their income. 

5. Tremaine Wills, MBA: Tune out the noise

Technology has made our world more connected and with that connectivity comes a barrage of information. With that much information it is important to remember to filter out the noise. “Every week there is ‘breaking news’ around financial topics that will easily stir up anxiety if you let it,” says Tremaine Wills, owner and financial advisor at Mind Over Money. 

Keep in mind that not every breaking news story will result in a significant change to your long-term financial plans. “Our job going into 2023 is to focus on our goals. Fear, stress, and worry are not invited with us on this journey.”

Like Williams, Wills is also focusing her message to clients on increasing their income. “I am also telling clients to make more money. The cost of living is rising and there is no amount of creative budgeting that can compensate for dollars buying less,” she says. 

The takeaway 

No one has a crystal ball for what will happen next year, but there are a few key things you’ll want to consider to ensure you reach your financial goals while reducing the severity of bumps along the way. Nearly every advisor mentioned the importance of building up cash reserves or finding ways to increase income. But how exactly much cash will you need in the event of a significant recession or loss of employment? This is where that comprehensive review of your finances can come in handy. 

“Consider going beyond the ‘3-to-6 months of expenses’ rule of thumb when calculating your emergency fund,” says Garrett.  “Unique risks such as job loss, insurance deductibles, disability insurance elimination periods, major home repairs not covered by insurance, and family emergencies that may require extensive travel should be acknowledged.” With a good plan in place, it should serve as a guiding light in the New Year.