5 Financial Goals for the New Year

The new year is here and now is the time to create financial goals to help you set yourself up for a more financially stable future. Sometimes, getting your finances organized can be a daunting task, but setting a few yearly goals can be easier than you think. Start the year off right by getting started on these five financial goals!

1. Review 2023 Spending and Create a 2024 Spending Plan

Even though this may seem like an obvious goal, many people find it hard to draft a spending plan for each month and stick to it. Most of the time, we don’t realize how much we may spend in various categories and can be surprised how small purchases over time can add up. Understanding your cash flow is an important aspect of determining if you have sufficient assets to meet your goals, whether that means buying a house, starting a business, helping to pay for children’s or grandchildren’s college, or funding a rewarding retirement.  

A monthly spending plan (or budget) is the beginning of gaining better control over your finances, and the more detailed it is, the better. Make sure that every penny is accounted for, including savings, investments, clothing, food, and entertainment. Doing so will not only help you realize how much you spend each month, but it will also help focus your spending in areas that are valuable to you and eliminate costs that don’t bring you as much value so that you can instead invest those funds for the future.

2. Contribute the Maximum to Qualified Plans

For high-income earners, fully funding your 401(k) plans each year may not be enough to meet all of your retirement goals, but contributing the maximum to these plans is certainly advisable (especially if your employer provides matching contributions). Each year the IRS adjusts the maximum amounts that can be contributed to certain account types, so you will want to review the amounts below and adjust your withholding with your employer to ensure you are making the maximum contribution for 2024.

• 401(k)/403(b)/457 – $23,000 ($30,500 if 50 or over due to catch-up contributions)
• SEP IRA – $69,000 ($76,500 if 50 or over)
• SIMPLE IRA – $16,000 ($19,500 if 50 or over)
• IRA – $7,000 ($8,000 if 50 or over)
• HSA – $4,150 single / $8,300 family (plus $1,000 catch-up for each individual age 55 or over who is covered by an HSA-eligible medical plan)

3. Set Your Investing on Autopilot

Once you have prepared your spending plan for the year, you will know how much you will be able to invest (we typically advise investing 20-40% of your gross income depending on how quickly you want to prioritize financial independence). Just like your 401(k) contributions are withheld from each paycheck, you should set up automatic contributions to your IRAs and other investments monthly or quarterly to ensure they are funded before the income is spent.

Too often, people that come to us have too much cash that has built up in their bank accounts that they either don’t know what to do with or they might be speculating what will happen in the markets and don’t want to invest it. At the beginning of 2023, many talking heads in the media were skeptical of what markets would bring and signs pointed toward a recession. However, that was not how the year played out, and if funds were held in cash, they didn’t get to benefit from the rally the market experienced towards year-end.

4. Update Insurance and Estate Plans Based on Life Changes

The beginning of the year is a great time to reflect on the life changes that happened and ensure that proper coverage is in place. Below is a series of questions that you can ask yourself to see if any changes are warranted.

• Did you get married, have a baby, or start a new job that necessitates reviewing your life and disability insurance?
• Have you updated your home’s insured value to account for continued appreciation in the housing market (albeit slower than in years past)?
• Do you need to make any changes to your estate plan, life insurance beneficiaries, or investment account beneficiaries due to a birth, death, or other change in family dynamics?

5. Create or Update Your Long-Term Financial Plan

We know that life is busy and that your time and money are being pulled in different directions simultaneously. It can be hard to know if you are on track or if any adjustments are needed without creating a long-term plan. Additionally, life is a journey and things change over time, so the plan that may have been created years ago will be out of date unless it is fine-tuned regularly and made to fit your ideal vision for your life.

Having a plan in place will help you stay on track and guide your financial decisions. Make this the year that you take control of your finances and get on the right track to achieve your goals. 

Consider the five financial goals listed above to help you get started. Whether you’re a long-term client or just starting out, let us help you in Navigating Your Life Journey^TM by calling (972) 403-1234 or contacting us online to set up a financial planning review or complimentary get-acquainted meeting so we can all collectively determine if we are a good fit!