Wealth Wellness: 4 Financial Resolutions for 2024

In a recent survey conducted by the American Psychological Association, a noteworthy 66% of Americans pinpoint money as a major source of stress in their lives.

With 2024 just around the corner, now is a great time to start thinking about what we can do to improve our financial lives. In our pursuit of wealth wellness, let’s explore four impactful financial resolutions that we can implement in the upcoming year. 

Building Up Our Emergency Fund

The broken refrigerator, the shattered glass sliding door, the unexpected medical expenses… the truth is that life doesn't always go as perfectly as we would like it to (all those happened to me in 2023).

As a result, the importance of having a robust emergency fund cannot be overstated. That is because an emergency fund serves as a safety net when we are faced with unexpected expenses. 

Without this financial cushion, we increase the likelihood of finding ourselves in a precarious financial position. Sure, everything might be OK for today, but that can change almost instantly. And the last thing that we want is to be forced to rely on credit cards or loans to navigate the unforeseen (yet inevitable) challenges that we can face.

Therefore, we should target trying to save anywhere between 3 to 6 months of living expenses.

And one of the best places to build our emergency fund is via a high interest savings account. 

Not only can a high interest savings account offer a passive way to protect our money against inflation but they also can provide quick access to our money. Additionally, high interest savings accounts also pay upwards of 15 - 20 times more interest than traditional savings accounts (national average is currently 0.6%).

Similar to traditional savings accounts, these accounts can also be NCUA and FDIC insured up to $250,000. I recommend checking out Bankrate for the best and most up to date offerings (they do a great job with keeping their lists updated).

Automating Savings For Peace of Mind 

Automating our savings is probably one of the most effective financial resolutions that we can implement.  

In practice, this boils down to setting up automatic transfers from our checking account to our savings or investment accounts. 

The most important benefit that this can yield is removing the burden of manual savings decisions.

That is because life can easily get busy. And amidst the hustle and bustle, it's easy to forget or postpone saving for the future. By automating our savings process, we are guaranteed a consistent and timely contribution to our savings account without the need for constant monitoring or effort on our part. 

Additionally, automating our savings can assist with minimizing the temptation to spend money impulsively. That is because when funds are automatically diverted to our savings account before we have the chance to spend them, we are less likely to succumb to making unnecessary purchases. 

Something that takes a few minutes of our time can strengthen our financial position and also better promote more mindful spending habits. 

Doing a Budget Review

Another simple and easy-to-implement financial resolution is taking some time to conducting a thorough review of our budget. By seeing what money is coming in and where it's going, we can make sure that we are allocating our limited resources more effectively. 

This can take the form of evaluating our current subscriptions that no longer serve a meaningful purpose in our lives or deep diving into existing services that we are paying for and seeing if there are more cost-effective options available.

While this can be cumbersome, this exercise can definitely be worth the squeeze.

As an example, I recently did a deep dive into my phone bill that was averaging around $120 / month. 

After doing half an hour’s worth of research (including calling the carrier), I was able to instantly cut my phone bill down to $60 a month for better coverage. Thirty minutes of my Saturday afternoon resulted in an annual net savings of $720 ($60 X 12 Months).

Additionally, a budget review can help us anticipate and plan for upcoming expenses. Whether it's an annual insurance premium, a family vacation, or home maintenance costs, having a clear understanding of our financial commitments ahead of time can allow us to set aside funds in advance.

By scrutinizing our budget under a microscope, we can get some quick financial wins under our belt, minimize the financial strain of unexpected expenses, and foster a sense of financial preparedness.

Increasing Our Retirement Contributions

The final financial resolution on our list today is increasing our retirement contributions. 

Whether we are allocating a potential salary raise or diverting extra money that we saved by doing a budget review, channeling more money into our retirement accounts can be a great financial move. 

The most obvious benefit being that additional contributions can directly boost the overall size of our retirement nest egg. 

By consistently making larger retirement contributions at regular intervals using a dollar cost averaging strategy, we can potentially buy more investment shares when prices are low and fewer shares when prices are high. This can help with mitigating the impact of market volatility, resulting in more stable and potentially higher overall investment returns over time. 

Furthermore, increasing our retirement contributions also offer a practical tax advantage. 

Pre-Tax contributions to our retirement accounts, such as 401(k)s or IRAs have the ability to lower our tax bill to Uncle Sam. By making more of these pre-tax contributions, we can directly lower our overall taxable income and potentially reduce our overall tax liability today. 

So not only do we receive an immediate financial benefit today, but we are also contributing to the long-term growth of our retirement savings. 

Final Thoughts 

In conclusion, as we stand on the brink of 2024, it's evident that financial stress is a prevalent concern for many Americans. As a result, let’s start planning ahead and start taking small steps today in order to have a prosperous 2024!

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Disclaimer: Nothing in this article should ever be considered advice, research or an invitation to buy or sell securities. I am not a financial advisor.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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