Home Personal Finance 12 Financial New Year’s Resolutions for 2024 | Family Finance

12 Financial New Year’s Resolutions for 2024 | Family Finance

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Key Takeaways:

  • Look at your financial resolutions as more like a financial to-do list for the year.
  • Financial situations change from year to year, which is why it’s important to update everything, from homeowners insurance to what you put in your retirement accounts.
  • Even if you’ve already achieved one of these financial goals, you can probably improve upon it.
  • Making some financial progress is better than not making any.

January’s half over, but the year has still just begun. If you haven’t tried to whip your finances in shape, this is a good time to start. You don’t have to think of these as financial goals as resolutions, but more like a reboot to your yearly financial to-do list.

If you want 2024 to be a better money year for your money, here are 12 solid financial things to try and stick to:

You probably have a budget, but it’s time to revise it to reflect your current state, says Siyu Wang, an associate professor in the department of economics at Wichita State University.

“Calculate your monthly income from all sources and categorize your expenses as essential, like rent and groceries, or nonessential, such as dining out,” Wang says. “The aim is to ensure your spending doesn’t outpace your income, while also setting aside money for savings and paying off debts.”

Being detailed is very important, she says, and tools like spreadsheets can be invaluable for tracking.

And while saving is important every year, 2024 should be a great one to do it, according to Taylor Sutherland, a San Diego-based senior wealth advisor and certified financial planner at Halbert Hargrove.

“One benefit of the increase in interest rates is that savers are finally getting paid again,” Sutherland says, referring to the trend of rising interest rates in 2022. “Cash is no longer ‘trash,’ so those emergency savings accounts should be earning something material.”

Sutherland says that if your bank isn’t offering competitive interest rates, such as 3.5% or better, on cash, you should consider finding a reputable online savings platform.

Wang suggests trying to build an emergency fund that covers three to six months of living expenses. It’s an ambitious goal, but the idea is to have enough income to live on if you were to lose your job or another emergency comes up.

“Even a modest emergency fund offers some security,” Wang says.

Paying yourself first is a term you’ll hear a lot of financial advisors use. It generally means “paying” your future self money before you pay all of your monthly bills. That means putting money away toward your retirement before you pay your mortgage, electric, groceries and so on.

An easy way to pay yourself first is by contributing to a 401(k), especially if your employer offers matching contributions, says Brian Stivers, an investment advisor and founder of Stivers Financial Services in Knoxville, Tennessee.

“I suggest you set a goal of setting aside 10% of your income each month for a future need such as retirement,” he says. “If your employer matches up to 4% of your annual income, then you would only need to contribute 6% of your income to pay yourself 10% of your income for retirement.”

A plan to reduce what you owe is really important, even if you have to make some financial sacrifices to do it.

“If you cannot reduce your debt to zero, try to minimize the balance. In order to enjoy your financial freedom, it is important that you have control over how much money you owe, no matter what the purpose of the debt is,” says Ganesh Pandit, a professor of accounting and chair of the department of accounting and law at the Robert B. Willumstad School of Business at Adelphi University in New York.

“Remember, in the end, you want to wake up each day knowing that you have control over your financial situation and hence over your life,” Pandit says.

That said, not all debt is bad.

Ideally, Pandit says, “If you must borrow, do it for things that will help you earn income, either now, such as a business loan that will actually earn you income, or eventually, like a gainful educational credential.”

He also recommends that if you have a spouse or partner you get on the same page regarding debt.

“In the end, the best kind of debt is one with a zero balance,” Pandit says.

Investing goes hand-in-hand with the “pay yourself first” resolution.

“Set a monthly plan of investing x dollars every month and stick with it, regardless of what is going in the markets,” says John Hunter, the MBA program director and professor of practice at Le Moyne College in Syracuse, New York.

Hunter advises investing with a longer-term mindset.

“Follow the historical market returns and don’t even think about the ups and downs of the markets. Don’t try to time the markets. The markets are smarter than you are. Think long term, act long term, be disciplined and you will get to your goals,” he says.

If you already invest, push yourself to invest more in 2024, especially if you have an individual retirement account or 401(k), says Brian Porter, a certified public accountant and professor of management at Hope College in Holland, Michigan.

“For the year 2024 there are new maximums for both 401(k) and Roth retirement accounts,” Porter says.

“For the 401(k), the maximum annual amount has increased to $23,000 per year with the catchup for age 50 or older remaining at $7,500. The Roth has increased to $7,000 with a catchup for 50 or older remaining at $1,000,” he says.

As college tuition costs rise, it’s especially important to save early with a 529 plan, a college savings account that’s exempt from federal taxes.

“While 529 college savings plans have been in existence since 1996, they are still not extensively used by families,” says Stacy Mastrolia, a CPA and associate professor of accounting at Bucknell University’s Freeman College of Management in Lewisburg, Pennsylvania. “Of families that are saving for their children’s college expenses, only 30% of savings are in tax-advantaged 529 accounts.”

She points out that 529 plans offer federal tax-free growth if the account is used for qualified education expenses, which could include private school tuition as well as college tuition.

If you have family members who depend on you, this would be a good time to make a will.

“It isn’t necessary to hire an expensive attorney and pay several thousand dollars,” he says. “Alternatively, there are online will makers that cost very little, around $100. These include Quicken Willmaker & Trust and LegalZoom.”

If you already have a will, Mastrolia has an excellent project for you.

“Make a legacy box or drawer to organize all of your legal and financial information so that if you die unexpectedly, your heirs can find all of your important documents, such as wills, investment accounts, insurance policies and car titles,” Mastrolia says.

“They will already be tragically sad at your passing. Don’t also make it a scavenger hunt to find your financial and legal information,” he adds.

If you have a rewards credit card, Porter suggests that you spend some of the year working on maximizing your credit card cash back, miles or points rewards.

“Hopefully you already pay off any credit card debt monthly and pay no interest charges,” he says.

“There are numerous reward credit cards offering generous enrollment bonuses, such as 100,000 miles for spending $3,000 during the first three months. The bonuses are often valued at $1,000 or more,” Porter says. “The $3,000 threshold needed to earn the bonus is easily achieved with purchases you may already have to make such as auto and homeowners insurance.”

Porter suggests looking into opening a health savings account.

“An HSA is a tax-advantaged medical savings account available to taxpayers enrolled in a high-deductible health plan. Contributions are not subject to federal income tax,” Porter says.

He says that HSA funds roll over and accumulate year to year if they are not spent. Meanwhile, the tax benefits can be a big help.

“Funds may be used to pay for qualified medical expenses at any time without federal tax liability or penalty,” Porter says. “Withdrawals for nonmedical expenses are treated similarly to those in an IRA in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier.”

Porter says that the maximum annual contributions this year are $4,150 for singles and $8,300 for families with an additional $1,000 for those 55 years of age and older.

Aside from evaluating your health insurance choices during open enrollment, take a good look at your homeowners insurance or car insurance. Maybe you’re paying too much – or you might be underinsured.

“Do you and your family have life insurance? Have the beneficiaries been set up appropriately?” Wang says. “These scenarios may seem far away, but it’s always better being prepared.”

Mastrolia points out that many homeowners insurance policies don’t increase coverage as inflation increases.

“As a result, you need to make sure your insurance coverage is adequate to repair or replace your home in the event of a disaster,” Mastrolia says.

We’ve all got something we spend too much money on. Mastrolia suggests zeroing in on one really bad financial habit that you have – and finding a creative solution for fixing it.

For instance, she says that if you’re an online shopping addict, you could delete your credit card from all of your apps. It may not solve your problem, but if you make it harder to impulse shop online, maybe you’ll do it less and save money in 2024.

She says that if you eat out a lot, spending a fortune at restaurants, you might try taking cooking lessons.

“Once you learn to make your favorite dishes, you can make them at home – more often – for a fraction of the cost,” Mastrolia says.

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