By now, you may have already given up on some of your New Year’s resolutions. Making huge changes all at once is often too much to sustain. Experts have said that small changes, made consistently over longer periods of time, can be just as transformative—and easier to maintain—than trying to force yourself to change overnight. Of all your New Year’s resolutions, financial resolutions could be the most important for your long-term security. Whether or not the following resolutions made it onto your list, here are eight financial moves worth making in 2024.
1. Track Spending
Many people can relate to the disappointing experience of wondering where all the money went. One minute they’re looking at a huge direct deposit from their employer in their bank account, and the next, it all seems to have dwindled away until there’s hardly anything left.
Tracking your spending gives you insight into where all the money is going, as well as your own spending habits. Use an app that categorizes each expense, keep receipts or use a money management software on your computer; whatever works for you. Knowing where the money is going gives you power to control it.
2. Build Your Emergency Fund
Think of an emergency fund differently than a regular savings account. Your savings account helps you save for long-term goals, whereas an emergency fund will get you through those big surprise expenses that no one wants to think about. You need both. Use your emergency fund to pay for things like:
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car repair bill
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furnace repair/replacement
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food, rent and utilities if you become sick and unable to work
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emergency dentist visit
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emergency veterinarian visit
Strive to accumulate an amount equal to one month’s salary, but keep contributing to your emergency fund even after this goal is reached.
3. Ask For a Raise
Increasing your income will help you to achieve all of your financial goals in 2024, plus help you to maximize your earning potential. If you’ve gone a long time without a pay increase, had scope creep, where your job responsibilities are slowly growing in number, or are simply underpaid in the market, it’s time to ask for a raise. For backup, visit Glassdoor, where you can see what your colleagues make in your same position or job title. Prepare for your meeting by making a list of all your job accomplishments, which prove your value to the company.
4. Pay Down Debt
Tackling debt is crucial for financial freedom. Start by listing all your debts, along with their interest rates and balances. Adopt a strategy: either the snowball method, where you pay off smaller debts first for quick wins, or the avalanche method, targeting debts with the highest interest rates. Consider consolidating debts into a single loan with a lower interest rate, making payments more manageable. Always pay more than the minimum to reduce interest accrual. Finally, cut back on non-essential expenses to allocate more funds towards debt repayment. Consistently reviewing and adjusting your strategy will keep you on track towards a mostly debt-free life.
5. Improve Your Credit Score
Enhancing your credit score is a pivotal financial goal that can jumpstart financial success throughout the year. Start by regularly checking your credit reports for errors and disputing any inaccuracies. Timely payment of bills is essential; set reminders or automate payments to avoid late fees and marks on your credit report. Reduce your credit utilization ratio by paying down credit card balances and keeping them well below the credit limits. Avoid opening new credit lines unnecessarily, as each inquiry can temporarily lower your score. If you have a thin credit file, consider a secured credit card or becoming an authorized user on a responsible person's account. Regular monitoring and responsible credit habits will gradually improve your credit score.
6. Educate Yourself
Financial literacy is something that many parents fail to teach their children. Still, there are plenty of free and paid resources available for you to educate yourself on areas where you may be lacking information. Your CPA is a valuable resource, who can explain the tax aspects of your financial dealings. The more you know about making, saving and investing, the better financial decisions you’ll make for yourself and your family. Make a point of either enrolling in an online course, reading finance-related books or watching instructional videos at least once a week.
7. Stop Paying Fees
Warren Buffet is notorious for penny-pinching. Do you think he’d pay petty fees without complaining? He once refused to do a deal when a potential partner quietly increased the share price by a few pennies. From bank fees to ATM fees, to small charges just for moving your money, stop letting money trickle through your fingers. With a little planning and foresight, you won’t have to pay extra just for paying a bill with a credit card instead of a debit card, or for buying gas with a card instead of cash. You could save all that money and stash it away in your emergency fund instead.
8. Start a Small Business
Turn a hobby or other interest into a small business and reap the rewards of dozens of business tax deductions. You could get credit for having a home office, using your personal car for work and using your cell phone for business phone calls. Your CPA will help you to learn how to set up a small business so you can maximize your tax savings while increasing your revenue streams. And who knows? There’s always the chance that your small business could grow into something where you can eventually work entirely for yourself someday!
Making and keeping these New Year’s resolutions is more than a one-time commitment. Done well, they can help you to achieve a lifetime of financial well-being and self-empowerment. And you don’t even have to do it alone. Your CPA doesn’t just crunch numbers; they can offer personalized advice, help you navigate through complex financial decisions, and develop strategies tailored to your unique financial goals.
by Kate Supino