As 2023 comes to a close, here are 10 things to consider concerning your finances, for 2024.
10 Things to Consider To Improve Your Finances and Wealth in 2024
Review your income and expenses for 2023. This will help you see where your money went. It will also help you see where you are haemorrhaging money unnecessarily. You can make cutbacks and changes accordingly. This will help you plan for 2024.
Track your spending: Have you ever reached the end of the month and thought ‘Where did all my money go this month?!’ At the beginning of each month, give every pound/dollar a name so you know where the money is going. This will also help you pay off debt or invest as you will be allocating money specifically to these areas each month.
Pay off high-interest debt: You may, like many, have splurged in spending coming up to and over Christmas.
According to MasterCard Spending Pulse, which analyses consumer spending, holiday sales in the US from the beginning of November to Christmas Eve rose by 3.1%. This is despite high inflation and high-interest rates.
After all the fun and joy of Christmas, you are now faced with credit card debt. Pay off the debt in full if possible. If you can’t, transfer to a 0% interest rate credit card and pay it off ASAP.
Alternatively, you may have taken out a Buy Now Pay Later (BNPL) loan.
Pay it off. Debt is a burden that weighs you down.
Create an emergency fund: If you haven’t already, create an emergency fund. The rule of thumb is to cover 3 – 6 months of expenses. This gives you security in the event of a job loss or illness and will cover you until you secure your next job.
Check your credit score: Your credit score is important as it shows how credit-worthy you are when applying for a mortgage or loan. It is based on your past behaviour e.g. do you pay your phone bill on time? If you had previous loans, did you ever default on them?
A good credit score can mean that you get approved for the mortgage, loan or credit card you apply for. It can also mean more favourable interest rates. Conversely, a bad credit score may mean your application gets turned down. Even if you are approved you may get a very high interest rate reflecting the risk level the financial institution believes they are taking on by giving you the loan, credit card etc.
Set Financial Goals: If you plan on getting married, buying a house, or clearing student debt or high-interest credit card debt, then plan to reach that goal.
For example, if you want to put a 10% downpayment on a house worth £240k, you’ll need £24k. If you earn enough to do this in one year, then simply plan to save £2k a month, if it’s over 2 years then it’s £1k a month etc.
Maximise retirement contributions: Saving into a pension/retirement account is one of the most tax-efficient ways of investing for your future. In the UK, you can contribute £60k per year. Even if you can’t contribute the maximum amount, don’t let that put you off. Every little counts plus the government tops up your pension depending on your pension contributions. Your employer may also contribute.
Depending on the retirement you would like and where you live, this post shows how much you need to save to get your desired retirement standard of living.
Invest in an ISA: Another very tax-efficient way of investing with after-tax money is an ISA or a Lifetime ISA if you’re under 40. Your money grows free of UK income tax and capital gains tax (CGT) and you can withdraw it at any time tax-free also. The maximum contribution is £20k per year.
As an example of how your money could grow free of UK income tax and CGT if you started with zero and invested the full £20k per year into a Stocks and Shares ISA at:
8% return for 20 years, you would have £954k.
5% return for 20 years, you would have £679k.
Review your investments: It’s important to review your pension, ISA and any other investments you may have. You need to ensure that your:
- investments are performing well
- investments are not getting devoured by fees and other charges
- provider (pension or ISA for example) is providing good services to you.
Review insurance policies: How many policies do you have? Life, health, house and car insurance for example? Have you got adequate cover? Are you paying too much for what you are getting? Do you need to increase your cover? For example, if you have had a serious illness you will need to increase health care cover.
As always, shop around for the best deals.
Invest in yourself: This is the best investment you can make. Upskill, train and increase your knowledge in your chosen field. The more valuable you are to an employer or client, the more money you can make.
Invest in your health. You’ve heard the saying ‘your health is your wealth’? Cut out over-processed foods, eat foods in their natural state where possible, reduce or cut out alcohol, don’t smoke, and exercise regularly.
Your health also includes your mental health. Try to reduce stress. If you are struggling with your mental health, talk to your spouse, a friend, family member or confidant. Seek help if need be. Go to your doctor and get a referral to a counsellor or psychiatrist. Do not suffer alone.
2024
As we approach the new year, I hope the above list helps you focus on the financial areas of your life that need planning and attention.
Finally, I would like to wish you a healthy, happy, peaceful and prosperous 2024.
Thanks for reading.
What plans do you have for 2024? Please share in the Comments section below.
DISCLAIMER: Inquisitive Finance operates on principles of exchange of knowledge, ideas and opinions and learning in the community. Your decisions are entirely your own responsibility, and I am in no way responsible for your actions. I am not a financial advisor. Whilst I strive to provide accurate and up-to-date information, I make no warranties or representations as to the accuracy or completeness of this information. Use common sense, do due diligence and where necessary, use the services of a licensed financial advisor, before making any financial decision and/or transaction.
