Financial Wellness Month | Setting Financial Goals for 2024
As January arrives, it ushers in Financial Wellness Month, an auspicious occasion to not only review our health and fitness resolutions but also to reevaluate our financial ambitions for the year ahead. The commencement of a new year offers a perfect opportunity to establish new financial goals and devise effective strategies to reach them. Life often surprises us with unexpected twists, underscoring the importance of maintaining a flexible financial plan. Before you commit to that new gym membership, pause for a moment to assess your financial well-being. How do you plan to navigate the ever-evolving financial landscape of 2024?
Crafting a Personal Budget
In the past year, we faced inflation rates reminiscent of the 1970s, placing a significant strain on our financial resources. This wake-up call serves as a stark reminder of the importance of being prepared for unforeseen challenges. One crucial measure in this regard is the creation of a household budget, providing a systematic way to track both expenditures and savings. Take a closer look at your essential and discretionary expenses, ensuring that they align with your financial goals. Additionally, it's prudent to reevaluate your sources of income, particularly if potential adjustments to social security could impact your budget.
Building Emergency Savings
As we embark on post-holiday budget adjustments, our attention naturally turns to bolstering our 'rainy-day' funds. The uncertainties that come with a new year underscore the importance of maintaining robust emergency savings. But how much should you aim for? Instead of relying on guesswork, let your newly crafted budget serve as your guiding light. A prudent goal is to save enough to cover your essential expenses for a period ranging from 6 to 12 months. If this target seems daunting, consider starting with a more manageable 3 to 6 months' worth and gradually increasing it next year. Remember, the key is consistent progress, not instant perfection. Just as your budget evolves, so should your emergency fund.
Retirement Account Adjustments
Inflation's impact extends beyond daily expenses, reaching into the realm of retirement accounts. In the year 2024, the contribution limits for Individual Retirement Accounts (IRAs) stand at $7,000, with a more generous allowance of $8,000 for individuals aged 50 and above. For 401(k)s, 403(b)s, and most 457 plans, the limits have seen an uptick, reaching $23,000, or $30,500 for those aged 50 and older. It's an opportune moment to capitalize on the potential to maximize these contributions, if feasible. Additionally, it's worth noting that the age for required minimum distributions (RMDs) has increased, obliging those over the age of 73 to adjust their retirement planning accordingly. Even if you fall into a younger age bracket, it's a prudent move to strategize for future RMDs in consultation with a financial advisor.
Estate Planning Essentials
For individuals who have an established estate plan, conducting annual reviews becomes indispensable to accommodate the evolving circumstances that life brings. If you have not yet initiated an estate plan, seize this moment to engage with a qualified advisor and craft a personalized strategy that aligns with your unique requirements.
Embrace the onset of the new year as an opportunity for financial growth and security. Consider reaching out to your trusted advisor to illuminate the path forward. Here's to a prosperous and financially astute New Year— Steady as You Grow.
About the Author
CFP®, MSAPMChief Investment Officer