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New year, new resolutions. And when it comes to resolutions, mastering your finances often tops the list. But don't worry, this guide offers a six-step roadmap for auditing your finances and reaching towards your financial goals for 2024.
1. Create a Budget
No financial resolution is complete without the dreaded budget advice. It is repeated and often disregarded, because it is thought of as too time-consuming or difficult. The days of manually creating a budget on a spreadsheet are long gone.
A quick Google search of user-friendly budgeting apps act as your financial compass that are both effective and easy to use. Understanding where your funds go is the first leg of your journey towards financial stability.
2. Establish an Emergency Fund
At some point in time, an emergency expense is going to arise. Whether it’s a broken appliance or a medical emergency, having a rainy-day fund will help you. Preventing you from having to go into debt to cover an unexpected expense.
Aim for a rainy-day fund with enough to cover three to six months of living expenses. This provides peace of mind and avoiding debt traps.
3. Pay down your Debt
Not all debt is bad. Mortgage debt and student loans are two examples of debt that are generally considered beneficial. However, high-interest debt like credit cards or auto loans should be avoided if possible.
Allocate a portion of your budget to reducing these high-interest debts. Slowly chip away at them with methods like debt snowballs or debt avalanches. This will reduce your financial burden.
4. Insurance
Insurance is an area many of us overlook because of its complexity and seemingly endless options. It is also an area that is vitally important if you ever need it. During annual enrollment periods, take the time to review your health insurance. Ensure it provides the coverage you and your family need.
If you have a family, review what you have for life insurance and disability coverage. Should something happen, you need to have a plan to care for your family if you are no longer alive or able to make a living.
5. Education Funds
Got bright futures planned for your children? Consider opening a 529 plan or a dedicated savings account, their personal trust for future college ambitions. Remember, the earlier you start saving, the easier it gets, ensuring their educational dreams can turn into reality. Learn more about college savings options in our blog, Saving For Your Child's College Funds- What You Need to Know.
6. Retirement Plan
Retirement might seem like a distant horizon, but just like training for a marathon, preparing early is key. Whether you're a seasoned professional or just starting out, a solid retirement plan acts as your roadmap to your financial freedom. Consulting with financial advisors can offer expert navigation and support along the way.
A comprehensive retirement plan will consider all aspects of retirement. It will help you reach your financial goals when ready to retire.
Taking control of your finances needn't be daunting. By implementing these six steps, you'll be well on your way to financial success in 2024 and beyond. Remember that it takes a bit of planning and proactive action. You'll navigate the financial landscape with confidence, reaching your goals and securing your long-term financial well-being.
If any of this sounds like too much, a CFP® professional like our advisors at Frontier Bank Wealth Management & Trust can help. We have the knowledge and experience to help you with your financial checklist.