Happy New Year!
Happy New Year!
As with every New Year, resolutions have been a popular topic of conversation. According to a 2024 Forbes survey, “Improved Finances” is included in 38% of 2024 resolutions. Unfortunately, the average resolution lasts just 3.74 months and only 6% of people report sticking to their goals beyond a year.
While I applaud those with lofty goals, the truth about improving finances is that small, simple changes and habits can have a big impact. If improved finances are part of your 2024 goals, consider the below adjustments you can make to build financial well-being – having the savings, investments, and cash on hand to afford the lifestyle you want for yourself and your family while ensuring that you will be able to retire comfortably and manage unexpected expenses.
- Set specific goals – “Being rich” sounds great, but is not exactly a concrete goal with achievable benchmarks. Specific dollar amount goals with set timelines can help you track your progress and enjoy the satisfaction of reaching those goals, whether that is making a major purchase, maxing out a ROTH, solidifying an emergency savings account, etc.
- Track Your Budget – Knowing your monthly expenses and sticking to them is an excellent way to guarantee bills are paid and savings are on track. Additionally creating a routine reinforces goals and helps in resisting splurging. Determining your monthly budget is not an easy task! Meridian recommends a budget tracking app like Monarch or YNAB or using a budget spreadsheet. For more tips on budgeting check out Lucy’s blog.
- Build Your Emergency Savings – A good rule of thumb is to have an emergency savings account that can cover three to six months’ worth of expenses, though that amount can vary. Once you have determined the appropriate amount to have available in case of emergency, prioritize funding that account. Not only will your emergency savings help you in the event of unexpected expenses, but knowing that you have it offers peace of mind.
- Don’t Just Cut Your Spending – Boost your savings – If you are able to make cuts in monthly spending, convert those funds into savings. For example, if you cancel a $100 subscription, rather than just leaving those funds in your account, transfer them to a savings or investment account. A small change like that can help build momentum towards your savings goals.
- Use automatic savings – Setting up automatic withdrawals to your savings accounts and retirements accounts streamlines the savings process. Automation saves time and doesn’t require ongoing work, so once you set it up, you can make progress toward your contribution goals without any extra effort.
- Manage Windfalls Wisely – If you receive a one-time financial windfall, like a bonus, inheritance, proceeds from the sale of a home or other large financial gain, take the time to evaluate your options with those funds, rather than splurging on a big purchase or letting them sit in cash. Those funds may be able to work for you in an investment account, or round out another savings goal.
- Pay off high interest debt – Not all debt is bad (more on that here), but high interest debt like that from credit cards can make wealth building difficult. Focusing on paying off credit cards in full each month is a great habit to establish.
- Maximize Retirement Benefits – Be sure to enroll in your employer’s retirement plan and make full use of any matching contribution benefit. Another small change to consider increasing your retirement account contribution by 1% each year until you have hit the max.
- Have A Plan – Having a financial plan, or updating your existing financial plan annually is a great way to understand how to achieve your goals, stay on track and stay accountable. This can help prepare you for life events and large purchases because you are planning ahead!
If improved finances is part of your 2024 goals, small steps like these can make a big difference and help you stick to your resolutions!
I haven’t made any major New Years resolutions for 2024, but I did purchase an annual pass to the Virginia State Parks to motivate myself to take advantage of living in this gorgeous area with more hiking. Here is a shot from my recent trek to the top of Old Rag Mountain.