1) Get Organized
Let’s start with the basics. If you haven’t been tracking your spending, January 1st is the time to begin. Use a budgeting tool – it could be a simple spreadsheet, your bank’s app, or a budgeting app like EveryDollar or Pocket. No matter what you use, the game plan is the same: 50% for essentials and 30% for discretionary spending, with the remaining 20% going to some type of savings.
2) Establish a Monthly Emergency Fund
Every year is the same in one way – you never know what to expect. That’s why having an emergency fund as a financial safety net is important. No matter how much you put in, the important thing is to start saving, with the ultimate goal of having three to six months’ worth of daily expenses on hand. This isn’t something that should be viewed as a want – it’s a need to keep your financial ship steady when the unexpected happens.
3) Choose a Strategy for Paying Down Debt
If you’re dealing with debt, especially high-interest debt, it’s important to tackle it strategically. Pay down accounts with the highest rates first (like credit cards), while making at least minimum payments on all other debts. You may also want to also consider consolidating multiple accounts into one payment.
4) Upgrade Your Investment Contributions
Whether you’re a first-time investor or a seasoned player, the new year is a great time to up your game. Start by contributing to an employer sponsored retirement plan, if one is offered. If you’re already contributing, increase the percentage a bit. For those with an HSA, try to max out your contribution to maximize the amount of tax-free money you have to spend for qualified medical expenses pre- and post-retirement. And parents should check out a 529 Plan for their kids’ education. The gains are tax-deferred and funds can be used tax-free when applied to qualified education costs.
5) Save for Something Special
Finally, putting money aside for short-term goals like a vacation or a new car adds a little excitement to financial responsibility and keeps you motivated.
So, there you have it – five no-nonsense goals to level up your finances in the new year. We’ll be here throughout 2024 and beyond to help you turn your financial plans into reality.
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