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With record high inflation, 2023 was a difficult year for many people. However, if you were lucky enough to have had a financially successful 2023, you may be looking ahead and wondering what you can do to replicate the success in 2024.
Step 1 is to review the past year to see what worked and what you want to continue doing over the next 12 months. After that? Try following some of this advice from experts on how to stay on a financial roll in the new year.
Increase Your Retirement Contributions
If you haven’t been focused on saving for retirement, now is the time to do so. Some employers will match up to a certain percentage of an employee’s paycheck to their 401(k). Think of this as free money for your retirement. If your employer offers a 401(k) matching program, make sure you take full advantage.
You can also contribute to other retirement accounts, such as traditional IRAs and Roth IRAs. Be sure to do your research to understand which type of retirement account best fits your needs.
“Capitalize on your financial success by boosting your investment contributions,” said Reagan Bonlie, founder of Nudge Money. “If you’ve received a salary increase or have extra savings, allocate a portion of this to your investment accounts, such as retirement funds (401k, IRA) or other investment portfolios. The key is to leverage compound interest and market growth over time.”
Automate Your Finances
If 2023 was successful for you, saving money may already be something you’re doing. But let’s make it even easier. To do that, you need to start automating your savings.
By automating your finances, you set up automatic withdrawals to move money directly from your paycheck or checking account to a savings or investment account. This can be done automatically on a weekly or monthly basis.
An additional benefit to automating things is that you won’t be tempted to spend the money since it’s already been allocated to your savings or investments. This same strategy can be used for paying off debt.
Diversify Your Investments
Diversifying your investments is one of the most important things you can do as an investor. You never want to put your money into just one basket. To diversify your investment portfolio, include stocks, bonds, real estate, and other asset classes. If you only invest in stocks, choose companies from different sectors like technology, consumer staples, healthcare, etc.
Before choosing your investments, assessing your risk tolerance and goals is important to ensure your portfolio aligns properly.
“Think of your wealth like a garden — it needs regular care to flourish,” said Richard Ford, co-founder of Hart Accounting Services. “Diversify your investments across different areas like stocks or real estate. Keep learning about finances to make smart choices. Remember, building wealth is about playing the long game, so be patient and steer clear of quick, risky schemes.”
Build Up a Larger Emergency Fund
If 2023 was financially successful for you, you may have already started building an emergency fund. Having an emergency fund is critical to creating financial stability. It’s almost guaranteed that unexpected expenses will happen, and having an emergency fund to pay for them will prevent you from needing to use your credit cards or take out a loan.
You should aim to have at least three to six months of living expenses in your emergency fund. If you are self-employed, this should be even larger. If you already have a sizeable emergency fund, stretch it even bigger. Aim for six to 12 months’ worth of expenses. This will give you additional peace of mind if you ever need the money.
If you’re unsure where to store your emergency fund, it needs to be accessible, but not too accessible. Most people use a high-yield savings account. These accounts offer a much higher annual percentage yield (APY) than your traditional bank, making accessing your money easier than if it was locked up in investments.
Make Specific and Measurable Goals for 2024
As we move into 2024, setting up goals for yourself is important. But giving yourself the best opportunity to reach those goals is also important. Set up measurable steps that you can take to help monitor your progress. For example, maybe you want to save a specific amount next year.
Break that big goal into smaller goals. This is going to make the process much easier and attainable. It’s also going to help keep you motivated.
Celebrate your wins
As you hit certain goals and milestones next year, celebrate those wins. Putting yourself in a position to be financially successful is difficult. There are a lot of things out there that can derail you from the right track. Having a positive attitude and celebrating your hard work can go a long way when motivating you to achieve the larger goals you have set.
The Bottom Line
Having a financially successful year can be really encouraging. Take that momentum and continue it into the new year for a financially successful 2024.
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