What are your goals for 2024? Do you have a big trip planned? Is one of your kids starting college this year? Are you nearing the age of retirement? There are so many big life moments that need financial backing. Start planning next year’s finances now in order to start off on the right foot.
Before deciding how to allocate your money in 2024, you first need to consider the big picture of your financial situation. What is your monthly income? How much do you owe in bills each month? How much debt do you have? Once you have a high-level view of your upcoming year, you can then start to create a budget, figure out how to allocate your money and set yourself up for spending success.
A budget is a spending and saving plan. Without a budget, it is easy to allow small or impulse purchases, such as trips to a coffee shop or adding a new item to your online shopping cart, to eat into your income. To create a budget, start by tracking your expenses. How much do you spend on food, personal care items, transportation, leisure activities and everything in between on a monthly basis?
After you have compiled these expenditures and placed them in categories, compare it to your monthly income. Do your expenses exceed what you are bringing in? Are you setting aside money to put into your savings? Generate dollar amount allotments you think you can reasonably stay within for each category, and start tracking your expenses. Staying within your budget will give you the flexibility to save for future events.
Borrowing money is a common practice in achieving long-term goals such as buying a car, purchasing a home or investing in secondary education. How you handle and pay off debt is an important part of maintaining financial stability. According to the Federal Reserve Bank of New York, total consumer debt balances reached $17.06 trillion in 2023, a 4.15% increase over the previous year.
Create a strategy for tackling your debt. If there is room in your budget, start paying a little more than the minimum amount each time you receive your bill. If you have one account that is accumulating more interest than the others, start making extra payments on that one. It may not seem like it is making a difference, but over time, you will end up paying less in interest, potentially saving you hundreds or thousands of dollars.
Over the course of the year, your budget may need to fluctuate. Unforeseen medical expenses, higher costs of living and different seasons of life may require you to be stricter or looser with your budget. Handle these changes with grace, and reallocate your budget as needed.
You can begin the year on a positive note by setting realistic financial goals and practically making progress toward them. Start by analyzing your financial situation. Next, create a budget, make a plan to pay off outstanding debt and be willing to adjust your budget as life dictates.
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