The new year is upon us! And so are New Year’s resolutions. If reviewing your financial situation wasn’t on your list, now’s a good time to add it. Here are 5 steps to shape up your finances in 2024.
- Dream big! Think about what you want your life to be like. Similar to the common resolution of losing weight, we have to know that magic number – your financial goal – and by when. Whether your plan is to build a college fund, have a fruitful retirement at age 65, or even to avoid worrying about not having enough, we must start at the end to guide us on our financial journey.
Think about it. If money was no longer an issue for you, what would you do? Where would you live? Who would you surround yourself with? Then bring those dreams down to reality and ponder what it would take for you to get there. Maybe you can’t just go quit your job tomorrow, but at least we’ll know what where were going and when we have arrived.
- Take stock of where you are today. Do you know where everything is and what everything is worth? Review your accounts and benchmark how far you are to your goals. Are you on schedule? Knowing this is critical to giving you sense of security and helping you to create “Financial Flow.”
While you might already have a financial strategy in place, you’ll want to review it regularly. Does your investment allocation still make sense? Because of the recent stock market downturn, your portfolio may have a lower percentage of stocks represented and rebalancing could be a good idea (putting your portfolio back in line with the original asset allocation).
- Consistency counts. In a declining market, like the one we have been in, many investors have the urge to let their emotions take the steering wheel. Don’t give in. Consider pushing through the urge of selling out. Warren Buffett has instructed us to be “Fearful when others are greedy and greedy when others are fearful.” If you’re feeling a bit fearful, you could fall back on consistent investing strategies like Dollar Cost Averaging*. This is a strategy of consistently investing a set amount into your portfolio each month. Some months you will be buying more shares at lower prices and others fewer shares at higher prices. The objective is to have a consistent strategy that keeps your emotions out of it. You should have a longer time horizon for this type of investment strategy, and you should consult your personal financial advisor on how this strategy can play into your situation.
- Plan for the worst and hope for the best. What would happen if you or your spouse died or became disabled? Many families would be devastated by the loss, not just emotionally, but financially too. Don’t let this happen to you. Review your current life and disability insurance plans. Has anything changed since you last reviewed the strategy? Review your beneficiaries and see if they need updating as well.
- Where there’s a will, there’s a way. When was the last time you reviewed your estate documents? Have you even created them? You’ll want to create a Will, Power of Attorney, and Healthcare Medical Directive and review those documents regularly. Consider who would take care of the kids if something happened to you and your spouse? Who would you appoint to manage your finances and health care decisions if you were unable to? These are important questions, but usually get set aside because they are uncomfortable to discuss. Don’t delay!
As you begin to turn over that new leaf, and strive to make 2024 a fruitful financial year, consider enlisting help from a financial professional to help you along the way. Many people don’t know how to manage their financial circumstances themselves. It’s perfectly normal. Be sure to interview a few to find a financial professional that fits with your financial circumstance.
So, here’s to 2024, may it be rewarding and prosperous for us all!
“Cheers to a New Year and another chance for us to get it right.”
* Dollar Cost Averaging does not assure a profit and does not protect against loss in declining markets. Also, since such a program involves regular investment purchases regardless of fluctuating price levels of the investment, consider your financial ability to continue purchases through periods of low-price levels. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.
Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Neither asset allocation nor diversification guarantee against loss. They are methods used to manage risk.
Jason Silverberg is a registered representative and investment advisor representative with Cetera Advisor Networks LLC. Securities offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. Financial Advantage Associates, Inc. is independently owned and operated.