The beginning of the year is a great time to look back at your financial habits from the previous year and find where you can make improvements.
If you’re ready to rearrange your finances in 2024, here are a few tips from Tim Kulhanek, a financial adviser at Stonebridge Insurance and Wealth Management.
Start a savings plan
- Make specific savings goals, like adding to an emergency fund, saving for retirement, setting up a college fund for your kids or preparing for large purchases, like a car or a home.
- Create separate accounts for each of your goals and set up automatic payments for them so you can reduce the temptation to stop saving when your budget feels tight.
- Start small by saving at least 5% from each paycheck into your employer-sponsored retirement account. Remember that something is better than nothing, and you can always increase your contributions to a more healthy 10–15% when you get a raise or a promotion.
Avoid borrowing money
- Consider making it your goal to avoid credit card debt in 2024, because the cost of borrowing money is only getting higher.
- Use cash instead of a credit card because when you see money leaving your wallet, it can help you avoid overspending.
- Create a plan of attack for paying off any debt you already have by picking a strategy like the avalanche method, where you pay off high-interest debt first and then roll that payment into the next-highest, or the snowball method, where you tackle your debt from lowest to highest balance.
Expand your financial literacy
- Start somewhere even if it’s a small investment of time. It could be listening to one financial podcast or reading one article a week. Set a reasonable goal for yourself so it’s easier for you to stick with it.
There’s ways to expand your financial literacy that are cost-effective and also helpful.
“Investopedia is a great resource,” Kulhanek said. “You can go there and you can learn about any financial topic you want, like what’s a savings account, what’s a checking account , how do I balance my checkbook?”
If you need help staying on track you can write your goals down; that helps you track your progress and can serve as a visual reminder to help you stay on the right path. You can also ask a family member or friend to be an accountability partner to encourage you to keep working at your goal. It also helps to remember that slip ups happen, and you should still enjoy your year.
“It’s okay to do some things that create some memories and experiences with your friends, family, people you love and care about,” Kulhanek said. “We just have to do it within the confines of an overall plan.”
If you need to tweak your plan to be able to pay for the essentials without abandoning your goal, you can lower your savings goal by a little bit. It can also work the other way, if you get a raise you might increase your monthly savings.
