Several years ago, my partner and I accomplished a significant feat: we successfully paid off $200,000 in student loans. The weight of dealing with two bachelor’s degrees and two master’s degrees had put immense financial and emotional strain on us for a long time. Therefore, paying off this debt became our primary financial objective. Currently, we have transitioned our focus and financial resources towards new goals such as saving for retirement and investing in our child’s future. Financial goals vary depending on the life stage one is in, and as we are all beginning a new year, it’s an opportune time to set new habits, routines, and financial goals.
The new year presents an ideal opportunity to establish new financial habits and goals. If the thought of initiating your financial goals seems overwhelming, or if you need some inspiration and guidance to start the year on the right financial footing, fret not. I have consulted with experts on how to jumpstart our financial goals and will be sharing their advice on saving, investing, and more so you can approach 2024 with confidence and financial acumen.
If your goal is to save…
Focus on your emergency fund first
Many financial experts advocate building an emergency fund as the initial step in saving. The often recommended rule of thumb is to save 3-6 months’ worth of expenses. This fund serves as a safety net during challenging times and helps avoid resorting to high-interest rate debt, according to Kendall Meade, a Certified Financial Planner at SoFi. It is crucial to ensure that your emergency fund is easily accessible and secure. Judi Leahy, Senior Wealth Advisor at Citi Personal Wealth Management, suggests storing your fund in a high-interest-bearing account like a high-yield savings account (HYSA). HYSA enables quick access to funds as needed and allows for your money to earn interest.
Review your retirement plan (and start saving if you haven’t already)
Commence saving for retirement early on as the sooner you start, the better. Leahy advises assessing available 401(k) or qualified retirement plans, particularly those offering employer matches. If you have a 401(k), you can contribute up to $24,000 annually in 2024. Evaluate your contribution amount and consider increasing it annually if feasible. Even a small 1% increment can significantly boost your savings. For those without access to a 401(k) or 403(b), opening a Roth IRA account is an alternative. With a Roth IRA, after-tax dollars from your paycheck can be invested. It’s essential to not only fund your account but also invest in it to leverage its tax-free growth. If uncertain about the process, seek assistance from your bank.
Make a plan for this year’s significant expenditures
Preparation is key when it comes to major purchases. Whether it’s weddings or vacations, planning ahead can help manage costs more efficiently. Assess your 2024 calendar, estimate expenses for events planned throughout the year, and set aside a portion of each paycheck for these specific occasions. Incremental savings over time can alleviate the financial burden associated with such events.
If your goal is to invest…
Educate yourself
Enhance your knowledge on investing by exploring resources such as books, podcasts, or platforms like Ellevest tailored for women looking to begin their investment journey. Seek guidance from a financial advisor or trusted individual to understand different investment avenues, risk levels, and suitable amounts to invest. Starting gradually and utilizing reliable resources can help you navigate the complexities of investment strategies that align with your financial objectives.
Develop your rules for investing
Establish a set of rules to govern your investment decisions. Outline factors such as risk tolerance levels, regular portfolio reviews, and trust in the investment process amidst market fluctuations. Curate a list of investments you comprehend thoroughly to make informed choices. Strategic planning and clear guidelines can bolster your confidence in selecting investments best suited for your financial aspirations.
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