With a new year comes new opportunities for your financial situation. GOBankingRates spoke with a financial advisor to gather ideas for improving your finances in 2024 and devised a list of the 10 most important things. Dominic James Murray, CEO and independent financial advisor at Cameron James, provided insights into awesome financial moves you should consider.
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Take a Fresh Look at Your Investments
“One of the most empowering things you can do is to take a fresh look at your investments — diversify, balance risk and ensure they’re in tune with your future goals,” Murray said. “It’s also an ideal time to review your savings plan. Are you saving enough? Are you saving smartly? This year, let’s focus on making our money work efficiently for us.”
You can use this new year to review your investments to ensure your money’s working for you and everything is on track. You want to be positive that your investing plan is ready for the new year.
Make a Plan To Tackle Your Debt
“Tackling debt requires a strategic and disciplined approach,” shared Murray. If you want to improve your finances in 2024, you’ll want to focus on becoming debt-free to have more money to invest in retirement and your other goals.
Murray broke down the two best ways to pay down your debt: “The avalanche method focuses on paying off high-interest debts first, which can save significant amounts in interest payments over time. On the other hand, the snowball method, which involves paying off smaller debts first, provides psychological wins and can help build momentum in debt repayment. This method suits those who need immediate satisfaction and a sense of progress to stay motivated.”
Whichever method you choose to use, it’s critical that you remain consistent and committed to debt repayment.
Establish Your Emergency Fund
“Establishing an emergency fund is a foundational aspect of financial security,” said Murray. “Initially, the goal should be to save at least three to six months’ worth of living expenses. This fund acts as a buffer against unexpected financial shocks such as job loss, medical emergencies or urgent home repairs, providing peace of mind and preventing the need to incur debt during crises. Starting with small, manageable amounts and gradually increasing contributions makes this task achievable.”
Your goal should be to build up this fund over the year by reviewing and adjusting how much you’re setting aside based on any changes to your income or lifestyle. A healthy emergency fund will give you financial security and ensure that unplanned expenses don’t ruin your long-term financial goals.
Make a Budget You Can Follow
“Effective budgeting is crucial for managing and growing wealth,” said Murray. “It involves a detailed analysis of income and expenditures, identifying areas where expenses can be trimmed while maintaining a comfortable lifestyle.”
A realistic budget that you can follow will help you set aside money for investments while ensuring that you can enjoy your current lifestyle. Without a clear budget, it’s difficult to determine where your money’s going and what aspects of your spending need work.
Review Your Spending Habits
“Regularly reviewing and adjusting the budget to accommodate changes in income, expenses and financial goals is also important,” Murray said. “A well-planned budget is a roadmap to financial security, allowing for informed spending and saving decisions. This might mean prioritizing essential expenses and cutting back on nonessentials. The aim is to create a budget that balances current needs with future financial goals.”
You’ll want to review your spending habits to see if they align with your financial goals so that you’re on track.
Diversify Your Investments
As a financial advisor, Murray advocates diversifying your investments so you don’t put all your eggs in one basket. “Developing a diversified investment portfolio is key to sustainable wealth growth. Diversification across different asset classes, such as stocks, bonds and real estate, helps to balance risk and return, tailored to individual risk tolerance and financial objectives,” he said.
You’ll want to look into ways you can diversify your investments since the last few years have proven that the market can be unpredictable.
Create a Retirement Plan
“Retirement planning is an integral part of financial planning,” Murray emphasized. “It involves saving and creating a comprehensive strategy to ensure a financially secure retirement. This includes determining retirement income needs, understanding various retirement savings vehicles and planning for contingencies. The aim is to develop a retirement plan that supports the desired lifestyle in retirement, considering factors such as longevity, healthcare needs and inflation.”
You can use 2024 to create a retirement plan that will set your future self up for a comfortable lifestyle. You don’t want to neglect planning for the future since you likely won’t want to work forever.
Figure Out Your Estate Planning
“Estate planning is about more than just distributing assets; it’s a thoughtful process of ensuring your wealth is managed and transferred according to your wishes,” according to Murray. “It involves decisions about who will inherit your assets and how to minimize the tax burden on your beneficiaries.”
Effective estate planning is an awesome thing to do for your finances in 2024 because this dynamic process should be frequently updated based on changes to your circumstances.
Murray concluded, “This planning ensures that your legacy is preserved and passed on in the most efficient and meaningful way, aligning with your values and family needs.”
Seek Out Quality Financial Advice
“In today’s complex financial environment, the guidance of a qualified financial advisor is invaluable,” Murray stated. “A financial advisor offers more than just investment advice; they provide a holistic approach to managing your finances. They can help you navigate market volatility, understand complex financial products and tailor a financial plan to your unique circumstances and goals.”
If you can afford to do so, you can begin working with a financial advisor in 2024 to have guidance throughout the process. If you’re uncomfortable with investing, for example, you don’t want to be alone in your financial planning journey.
Ensure That You Can Afford Your Desired Lifestyle
“As we enter 2024, it’s a fantastic time to re-energize our financial strategies. It’s about embracing smart, proactive measures to not just grow our wealth but to align it with the lifestyle we aspire to lead,” Murray said.
You want to ensure that you can afford your desired lifestyle in the present and in the future when you retire. The best way to do this is to be proactive about your spending habits and investing. As 2024 approaches, set goals in order to achieve your desired lifestyle.
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 10 Most Awesome Things You Can Do for Your Finances in 2024