Whatever your life ambitions, it takes deliberate planning and actions to make it happen and that starts with goal setting. Setting meaningful, realistic goals is critical to ensuring life happens as you want. If you can visualize it, you can make it happen. To make next year a pivotal year for you and your family, here are a few financial goals you should consider for 2024.
Live Beneath My Means
According to many of the world’s wealthiest self-made people, the key to building wealth is to live below your means. For the rest of us, that translates to setting lifestyle expectations a notch or two below what we think we can afford. This is less about budgeting—although that plays a critical part—and more about behavior and lifestyle choices. It is about assigning each dollar you spend to a purpose or a goal, and if it doesn’t fit the purpose or goal, it is not spent.
Develop a strict spending plan
The next step is to develop a spending plan with the goal of directing a specific dollar amount each month to debt or savings. If the goal is to free up $500, that becomes the first item in your spending plan and the commitment to your goal. If you receive two paychecks each month, the first expenditure is $250 towards debt reduction or savings. Everything else is itemized as either essential (rent, food, transportation, utilities) or nonessential (new clothes, entertainment, and everything else). When your spending plan comes up short, any adjustments should be made first with nonessential items, then essential items, but never adjust your commitment.
Increase your emergency fund
You should have at least six months of living expenses in a separate savings account for unexpected financial setbacks, such as a major house or car repair, medical expenses, or job loss. If you don’t have an emergency account, start one and prioritize it for your excess dollars.
Pay off high-interest debt
With interest rates elevated, paying down high-interest debts like credit cards and personal loans is essential. The best method to pay off credit card debt quickly is with the “debt avalanche” method. Line up your credit card accounts and commit to paying off the card with the highest interest rate first while continuing to make the minimum payments on your other cards—then repeating the process with the next highest interest rate card.
Increase retirement contributions
If you have a retirement savings account, such as a 401(k) or IRA, work out a plan to increase your contribution percentage by ten to 20 percent. If you receive a raise at work, that is a great time to try to increase the percentage you put away for retirement. If your employer offers a match, it’s a good idea to increase your contribution to the extent it maximizes that employer match.
Get your estate plan in order
With estate planning, you can never set it and forget it. Any life change—childbirth, a change in marital status, a home purchase—should prompt a review of your legal documents. That would include updating your will, living trust, and ensuring your power of attorney and medical directives are up to date.
Review your insurance coverages
Start with your homeowner’s insurance. Has the value of your home increased? Are your replacement limits keeping pace? Also, check your liability coverage on both your homeowners and auto insurance. If you already have the maximum liability coverage, consider a personal liability umbrella policy.
You should also review your life insurance policies to ensure they are keeping pace with your family protection needs. If you have disability coverage, is the benefit amount keeping pace with your income?
Pace yourself
The good news is that you don’t have to accomplish all these goals simultaneously. If you have questions, it might be a good idea to share this checklist with your financial advisor, so they can help keep you on track.
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