'Tis the season to deck the halls, catch snowflakes, and brainstorm your 2024 New Year's Resolution. December is unofficially designated as a time to write down personal goals and aspirations for the upcoming New Year. People may plan to exercise more, follow a strict nutrition plan, begin a new skincare routine, read more, use social media less, etc. But how many of us use the space between Thanksgiving and the New Year to get our finances in order? We all have goals we aspire to reach, but what steps can you take to get there? Here are five tips for achieving your financial goals in the new year:
1 – Create a Realistic Budget
A budget is a visual representation of your spending habits and necessary expenses, given your monthly income. If you write down what you consistently spend money on, you can quickly identify frivolous things you can remove from your expenditures and create a plan to stay on track and within your means. No matter where you happen to be – just starting your career or approaching retirement, a written budget is essential for getting your finances in order, keeping your finances in order, and reaching your financial goals.
Sometimes, creating and sticking to a budget can be easier said than done – especially when you're carrying debt. Most people have some form of debt, whether it be an auto loan, credit card, student loan, or mortgage – it's part of life. Many of these forms of debt are for necessary expenses that impact how you save and spend money. A budget is not a magic formula but a spending plan for identifying and minimizing unnecessary expenditures and reducing debt. Consider adding columns to your budget for "have to have" and "nice to haves." hose determinations can identify how you create debt and plan for consistent repayment. Consider it an investment in your financial wellness.
2 – Be Deliberate & Disciplined
Building a financially healthy life in the pursuit of financial freedom requires discipline! How you spend your money indicates your priorities and how prepared and committed you are to your financial aspirations. It's so easy to be tempted by high-tech products, the newest gadgets, weekend getaways, and fun with friends, but your vision of the life you want is worth so much more in the grander scheme of things. Sacrificing the things you want now for the things you need will allow you to reach your goal.
There are practical steps you can follow if you want to experience the benefits of proactive financial management. In addition to creating a personal budget and implementing a disciplined routine, stick to the budget you make. For example, if eating out is a priority for you, create a fund. Start by identifying how much to contribute per paycheck to the fund (it could be an envelope in your sock drawer), how often your budget will support dining out (weekly or monthly?), and most importantly – stick to it. That's where discipline can and will pay off in the long run.
3 – Set up an Emergency Fund & Save, Save, Save
If you have cash left in your account after paying all necessary expenses, it's not a signal to splurge but rather an opportunity to start saving and investing. An emergency fund is critical; it can help cover unexpected expenses and avoid additional high-interest debt. It's important not to mistake an emergency fund for a traditional savings account. To avoid confusion, you can open a separate checking account and name it "emergency fund" or designate a portion of your savings for emergencies. Suppose you still have money left after contributing to your savings/emergency fund and covering necessary expenses; consider investment opportunities to grow your wealth by contributing to a 401K or IRA or putting your money into a high-yield CD.
4 – Get Insured
Health issues and injuries can often create unexpected expenses, so secure health insurance coverage before 2024 knocks on your door! Your health is an investment, so if your employer doesn't cover your healthcare costs, now is the time to search for insurance options to protect yourself in an emergency. Your health and, in turn, your ability to work could be a financial risk determining financial success and failure. Prioritize your finances, but always remember you are your priority – the money doesn't move without you, so put yourself first.
5 – Follow Through
Don't let procrastination set in. If you do, it can delay your journey toward financial freedom and reaching your goals. Financial goals are achievable with some effort and a time commitment. The key is to educate yourself and remain engaged with the goals you’re working toward. Get your notebook out and get started – all it takes is a pen, paper, and your willingness to dig in.
So, create that budget, eliminate unnecessary spending, adjust your financial habits, ensure you're covered, and be disciplined. If you start with the practical steps outlined here, when the ball drops at midnight on New Year's, you've already set yourself up for success by breaking old habits and replacing them with new ones for the coming year.