3 Money Moves You Forgot To Make in 2023 — and How Much It’s Costing You
The best way to decide which money moves will put you on the path to financial freedom in 2024 is to take inventory of the ones you should have made in 2023. This year’s clock might have run out, but you can add fuel to your resolutions for the one to come by ensuring you don’t make the same mistakes twice — and by knowing how much those mistakes might have cost you the last time around.
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Did you neglect to make any of these key money moves in 2023? If so, you’ll have a chance to right your financial wrongs starting Jan. 1.
Getting Estate Planning Out of the Way Before It’s Too Late
Some people assume trusts and wills are only for the rich because they don’t consider their 401(k)s or modest homes sufficiently grandiose to qualify as “estates” — but the necessity of planning for the inevitable doesn’t come with a minimum income bracket.
If you left the ultimate loose ends untied in 2023, your children or other heirs will get stuck with the tab if you don’t get your ducks in a row.
“Do your estate plan,” said Renee Fry, CEO of estate planning platform Gentreo. “Stop waiting for tomorrow. Save yourself and your family time and lots of money by getting your will or living trust and more done. Families lose money every year because planning wasn’t done.”
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The Cost of Doing Nothing
Not only can estate planning reduce your tax burden significantly, but when someone dies with no plan in place, the fate of the assets falls to the mercy of the courts — and the legal process is long and expensive.
“An estate with no plan loses anywhere from 3% to 10% of its value to legal and court fees,” Fry said.
There are emotional consequences, too, with siblings and other heirs often left squabbling for their share and wondering what your wishes might have been.
If you let 2023 slip by without ensuring your assets are distributed according to your wishes, you’re essentially stealing from your posterity.
Cashing In on a Market Rebound for the Ages
In 2022, the stock market suffered its worst year since the start of the Great Recession in 2008. With the S&P shedding nearly 20% of its value, many either tried their hand at stock-picking in 2023 — a fool’s errand for nearly all investors over time — because so many companies were selling shares at a discount. Others sat it out entirely for fear of buying into a market that hadn’t yet reached its bottom.
“Many individuals either kept their savings in low-interest bank accounts or chased high-risk investments without a balanced approach,” said Dennis Shirshikov, professor of finance, economics and accounting at the City University of New York and the head of growth at real estate investing platform Awning. “This potentially cost them the compounded returns they could have earned from a more diversified portfolio.”
A Single ETF Could Have Added a Quarter to All Your Dollars
The easiest, cheapest and most direct route to a diversified portfolio is an index fund ETF, and if you weren’t contributing to one, the fact that the market is closing out the year at record highs could be a tough pill to swallow.
“A common smart money move I observed people failing to make in 2023 was investing in low-cost index funds,” said finance specialist Josh Michaels, CEO and founder of Money4Loans. “Many missed the opportunity to grow their wealth through these relatively safe and historically reliable investment vehicles. The cost is significant over time, potentially amounting to thousands in lost compound interest.”
For example, the popular and inexpensive Vanguard 500 Index Fund ETF (VOO) is up more than 23% this year, but many people like you left money on the table.
“A colleague of mine missed out on substantial market recovery gains by not investing consistently,” Shirshikov said, “demonstrating the cost of sitting on the sidelines.”
Tracking Your Expenses
If you didn’t create a budget in 2023, you almost certainly diminished the gains you might have realized from any of the smart money moves you did make this year — and it’s a step that many people skipped.
“In 2023, I saw folks fail to budget or track expenses,” said Michael Dinich, personal finance YouTuber and podcaster and founder of Wealth of Geeks.
Unlike with ETFs never purchased or estate plans never made, it’s impossible to quantify how much you lost by failing to track your expenses; but, over time, the slow, steady drip of overspending can condemn even high earners to live check to check.
“Without knowing where your money goes each month, it’s way too easy to overspend on little things like takeout, shopping splurges or multiple streaming services,” Dinich said. “Small expenses really add up, costing people thousands in missed savings and investment gains over time. So do yourself a favor and start monitoring your spending in 2024.”
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This article originally appeared on GOBankingRates.com: 3 Money Moves You Forgot To Make in 2023 — and How Much It’s Costing You
