When I think of resolutions for the New Year, I think of getting into shape, cleaning up my diet, decluttering my home. But financial resolutions? Yes, along with becoming a healthier version of myself, I also believe that our financial wellness should be at the top of our resolution "to do" list.
This season of giving is also a season of overspending for many of us.
Approximately 70 percent of consumers surveyed by TD Bank reported overspending during the holidays last year, with nearly half of those saying they overspent by around $300. (1)
If you are one to engage in a little spending overindulgence trying to find the perfect gifts for your loved ones, the end of the holiday season might leave you feeling the financial pinch and ready to improve your financial fitness. Around 30 percent of people surveyed by Forbes say they set New Year’s resolutions to improve their finances. (2) If you’re in that group, we can help you! We’ve already been working together to put you on your path to financial freedom, but there’s always room for improving your financial situation.
Here are some potential resolutions to improve your financial fitness in 2024:
1. Clean Up Your Budget
Even though inflation was down since it hit record levels in 2022, the higher cost of items and rising interest rates still impacted all of our wallets and budgets in 2023. (3)
As such, it’s important to regularly review and rework your budget to ensure you’re trimming any unnecessary expenses and stretching your dollars as far as they can possibly stretch. When you engage in these reviews, you can identify if your current services can be swapped out for more cost-effective alternatives. Or you might identify that you’re subscribing to similar services and can cut some of them.
2. Pump Up Your Savings
The IRS recently increased the contribution limits for people who contribute to 401(k), 403(b), most 457 plans and the government's Thrift Savings Plan, from $22,500 now to $23,000 in 2024. Take advantage of stashing away an extra $500 in 2024 in your retirement account.
Plus, we can always use extra infusions into emergency savings accounts. CNBC reports that 56 percent of Americans wouldn’t be able to cover a $1,000 unexpected expense. (4) Let’s connect and talk about how much you should stash away in your emergency savings account based on your individual circumstances.
3. Work on Your Estate Planning
Estate planning is an essential part of your financial plan. And a lot of people are avoiding it. According to Caring.com, two out of three Americans do not have any estate planning documents in place. (5)
One of the most practical reasons to get started on this process it to protect your loved ones in the event of your incapacitation or death. Think about it: the average cost of a funeral is around $8,000.6 Do your loved ones have that covered?
If we haven’t yet convinced you to start on your estate planning, give us a call and we’ll get started. We can go through and put together a plan for who you want to be in charge of your financial decisions and medical decisions in the event of an incapacitation, and how you want your assets to be distributed after you die. If you have kids, we can also identify guardians for them. Let’s not wait on this one!
4. Reexamine Your Insurance Needs
Your insurance needs may change as you age. It’s important to review your policies and make sure they still meet your needs. For instance, if you're planning on retiring soon, you may need to adjust your life insurance policy to reflect your new income and retirement goals. Additionally, as you age, you may need to consider long-term care insurance if you're not already covered. Let’s review your coverage and ensure you are adequately covered.
5. Hold a Family Summit
It's not just enough to have your finances in order, your family needs to be in the loop – especially when it comes to estate planning. Make it a goal in 2024 to hold a family summit and keep your loved ones updated on your wishes and their role in your financial and estate plan. For example, if in reaching your estate planning resolution you identify a medical power of attorney and financial power of attorney, you can inform these people of your plans and wishes.
Keeping your people in the loop can increase the chances your wishes will be honored and reduce the chance of disputes, making the process smoother for everyone involved. If you need some help with this, we can help you!
6. Increase Your Odds of Success
As we enter a new year, it’s important to reflect on your financial situation and consider making some resolutions that can set you up for success. By focusing on your budget, insurance needs, estate planning, and keeping your family abreast of all of it, you can reduce stress in your life. Let us help guide you through the process. We can work with you to increase your chances of success in setting and reaching one or many of these financial resolutions! We will help you develop a strategic plan that takes into account your individual financial situation.
Cheers to a financially successful 2024!
To your success!
John D. Davis
Managing Partner / Wealth Advisor
Legacy Wealth Management of KY
Sources 1. https://www.prnewswire.com/news-releases/td-bank-survey-reveals-holiday-shoppers-navigating-inflation-fueled-holiday-season-by-banking-on-their-budgets-301681925.html 2. https://www.forbes.com/health/mind/new-years-resolutions-statistics/ 3. https://www.cnbc.com/2023/08/31/living-paycheck-to-paycheck-inflation-is-still-squeezing-budgets.html 4. https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-cover-a-1000-emergency-expense-with-savings.html 5. https://www.caring.com/caregivers/estate-planning/wills-survey/ 6. https://nfda.org/news/statistics
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