For many people, the new year represents new beginnings and the opportunity for a fresh start in different areas of their lives. It’s also a great time for a financial checkup. Consider creating and carrying out a list of financial to-dos for the year ahead.
From taxes to asset allocation to legacy planning, there are several areas of wealth management to consider — and they can be difficult to course correct once they’ve veered off track. Here are five steps you can take to stay on top of your financial wellness — and carry that momentum all through the year.
1. Take time to evaluate your goals.
Start by putting pen to paper and mapping out your expectations for the new year — or, if you’ve already done so, revisit them. If you’re intent on increasing your savings account balance by $10,000 before year-end, for example, figure out what it will take to achieve that goal. Some simple napkin math will give you a sense of what your monthly 2024 budget should look like.
When it comes to choosing your financial goals, don’t just jot down a few cursory nice-to-haves. Going away for a long weekend can give you the perspective and renewed focus you’ll need to start crafting a roadmap for the year ahead.
2. Focus on debt reduction.
No one likes to be saddled with unpaid debt. To get a fresh start in 2024, try to get free of debt — or at the very least, try to pay down high-interest debt like credit cards and personal loans as soon as possible.
Once that’s done, you can reassess what is your largest debt obligation. For many people, this may be their mortgage. Sure, refinancing is an option, especially as mortgage rates begin to cool. But if you have extra cash on hand, consider mortgage recasting — that is, making a lump-sum payment toward its principal. Doing so can lower your interest expense over the life of the loan and help you get debt-free quicker.
Settling financial obligations can be difficult, but it’s possible with some clever budgeting. High earners making over $160,200 may end up fully funding their Social Security contributions early through payroll deductions. If you’re one of them, you could plan to set aside 6.2% of your paycheck — the percentage you were paying into Social Security — for clearing debts afterward.
If you received a lump-sum payment from an inheritance or bonus, diverting it to pay off debt may also be a great option. The benefit of investing these sudden windfalls often doesn’t outweigh the risk of letting interest accrue unchecked.
3. Reevaluate your portfolio.
In case the financial landscape remains rocky in 2024, make sure your portfolio aligns with your tolerance for risk. For example, if your goal at the beginning of last year was to carry a 80/20 portfolio by the end of the year (meaning, hypothetically, 80% of your assets are in stocks, and the remainder is in fixed income assets), your assets may bring you closer in line to a 60/40 or 70/30 portfolio. For 2024, you’ll want to revisit the allocation of your assets to support your intended financial goals.
Next, consider savings opportunities that your employer may offer. For example, if you didn’t fully max out annual retirement contributions via your company’s retirement plans (401(k)s, 403(b)s) last year, consider doing so in 2024. Don’t forget to capitalize on profit-sharing plans as well.
4. Get a head start on your taxes.
Tax season is just around the corner, and as you look back over the past year, you might as well prepare to file now — it could save you a lot of time and hassle.
Start by meeting with your accountant, who can help you calculate your annual spending. Be sure to track any realized gains and losses from your investments and what impact they may have on your current income tax situation. You should also think about making contributions to your simplified employee pension plan, assuming you have one and have yet to max out its limit.
Now is also a great time to reflect on how you can better prepare your 2024 taxes. You can start by finding ways to reduce your taxable income altogether. If you’re eligible to itemize your deductions, for instance, consider leaning on charitable contributions. And if you have a large estate, you can work with your own tax and legal advisers to consider gifting it to your kids or grandkids this year to reduce estate taxes.
5. Block out time for accountability.
We’ve all experienced the following in some form or another: You kick off the new year with a renewed sense of resolve and commitment, only to slowly lose sight of your goals as the months pass by. That’s why you need an effective way to hold yourself accountable all year.
The best way to do that is to block out a monthly time on your calendar in which you’ll assess your progress toward your year-end goals. That time should be shared with somebody who will hold you accountable — a good friend, a co-worker or a significant other, for example. What matters most is that you will listen to that individual. Then, raise the stakes by writing a check to a charity of their choice and handing it off to that person. If you renege on your financial check-ins, that individual can mail that check off to the charity — and if you stick to your financial goals throughout the year, they can return the check to you.
Taking some time to set your financial milestones for 2024 will allow you to finish the year strong — and put you in position to start 2025 even stronger.
This article, which has been obtained from an outside source and is provided as a courtesy by Stephen B. Dunbar III, JD, CLU, Executive Vice President of the Georgia Alabama Gulf Coast Branch of Equitable Advisors, LLC, does not offer or constitute, and should not be relied upon, as financial, investment, tax, legal advice. Your unique needs, goals and circumstances require the individualized attention of your own tax, legal, and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its affiliates do not provide tax or legal advice or services, nor do they endorse, approve, or make any representations as to the accuracy, completeness, or appropriateness of any part of any content linked to from this article. Stephen B. Dunbar III offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC. Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. AGE-6174135.1(12/23)(exp.12/25)
Stephen Dunbar, Executive VP of Equitable, has built a thriving financial services practice where he empowers others to make informed decisions and take charge of their future. He and his team advise on over $3B in AUM and $1.5B in protection coverage. As a National Director of DEI for Equitable, Stephen acts as a change agent for the organization, creating a culture of diversity and inclusion. He earned a bachelor's in Finance from Rutgers and a J.D. from Stanford.
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