New Year’s Day is widely considered the most celebrated holiday around the world as people, universally, find commonality in looking forward to a fresh start and new beginnings. New Year’s festivities find their roots going back to Mesopotamia around 2000 BC and even have origins associated with the Julian calendar system under Julius Caesar. Whenever and however people celebrate, this tends to be a great time of year to review several areas of your financial life. Below are 4 tips for a “fresh start” to your financial security in 2024:
Review Increased Limits for 2024. Several annual limits have changed for 2024 that increase the amount you’re able to contribute to 401(k) plans, IRAs, and Health Savings Accounts. If you intend to fully maximize these savings vehicles, be sure to review any automatic contributions/withholdings elections to ensure you’re still on pace with the increased limits.
Review your budget. January is a great time of year to review your spending over the past year. Were your spending habits in 2023 consistent with your personal goals? What surprises came up during the year that you’d like to better plan for going forward? Budgeting tools like Mint, Quicken or youneedabudget.com can all help with this if you’re not currently using a budget. These tools can offer you a plan for your hard-earned money and can help ensure that plan matches your personal goals.
Review your will and estate plans. There’s no good or fun time to do this, so knocking it out at the beginning of the year puts you in a good spot moving forward. Every adult should have a will, and most people should consider other documents as appropriate (power of attorney, health care surrogate, living will, etc.). If you haven’t updated your documents in a while, this is a great time to review them and ensure your plans still make sense. Perhaps just as important, do the people named in your documents know they’re named and how to access them? If not, there’s no time like the present to do your family a huge favor and get these affairs in order.
Take a financial inventory. As year-end statements start rolling in, January can be an excellent time to update your balance sheet and take stock of how you store/retain documents. Below are some areas this could include:
- Review current assets and their values
- Review current debts and their balances, including interest rates
- Review your latest credit report and score
- Review insurance policies and see if coverage is still appropriate
- Review all beneficiary designations to ensure they’re still appropriate
While this might feel like a lot, this process often goes smoother than most people think. You’re likely to learn a few things along the way and make some positive changes that will provide peace of mind that you’re off to a great start in 2024!