By Brandon Miller, CFP–
Happy New Year! Assuming you’ve recovered from your New Year’s celebration by now, it’s time to shake off that fog and start the new year off right. While I’m not a fan of “resolutions,” I am a big fan of planning. Taking easy steps now can spare you headaches down the road. So why not add some financial refreshers to your resolution list?
Revise that budget.
If you haven’t revised your budget yet, this is the perfect time to do so. First, assess your monthly cashflow. How much money are you bringing in? What are your fixed expenses, such as a mortgage, insurances, car payments, numbers that won’t really change from month to month? Then work from there to personal expenses that are important to you, such as those for classes you take, morning coffees, and DoorDash. This also includes your retirement contributions as well (more on that later). Then take a hard look at your actual spending from 2023. Did you allow for enough for Ubers back from The Lookout? Make sure that your budget and bank account are in line and adjust where they aren’t.
Work to meet savings goals and set up an emergency fund.
Were you able to hit your savings goal last year? If so, that’s great! Keep doing what you are doing and ask yourself: Could you increase your goal? Did you get a pay increase last year? Make sure you are making that money work for you somewhere.
If you didn’t meet your savings goal, this will be a great time to sit down and see what you can tweak to set up for success this year. Your savings are for things like vacations, college tuition, and a down payment for a house. This isn’t your oh no I got laid off fund. That’s separate and you should be saving for life’s curveballs, too. The rule of thumb is to have enough in your emergency fund to sustain yourself for 3–6 months of housing expenses and monthly expenses.
Down with the debt.
Debt can be a bump in your road to financial independence. Make sure you are paying it down and making higher than the minimum due amount when possible. Start with debt with high interest rates, such as credit cards and student loans. For debt, we don’t want to carry much of a balance. We understand that life sometimes has a way of catching us off guard, such as having an emergency vet visit or your car breaking down and needing to pay the mechanic. But don’t let the debt get so big that it looms over you like a dark cloud.
Save for retirement.
Make sure you are also saving via a retirement plan. If your company has a match, ensure that your contributions are capturing as much of that match as possible. It’s also not too late to add to your IRA. The IRA contribution limit for 2024 is $7,000 for those under age 50, and $8,000 for those age 50 or older. You can make 2024 IRA contributions until the federal tax filing deadline for income earned in 2024. This is up from 2023’s limits of $6,500 for those under age 50, and $7,500 for those age 50 or older. You can make 2023 IRA contributions until your April 15 federal tax deadline for income earned in 2023.
Get your affairs in order.
No, not those kinds of affairs. It is daunting to think about, but estate documents are critically important. Super key documents that we recommend everyone have prepped are a durable power of attorney and a revocable living trust. Updating your beneficiary designations is also part of this routine. At the very least, avail yourself of free resources to help get one set up. It’s crucial to have something in place.
Early January is an opportune time to consider the larger impact that changes you make now could have by the end of the year. Even minor adjustments today can make a big difference over time.
The second Friday of every January is infamously known as “Quitter’s Day.” It’s the day on the calendar by which most people have already abandoned their freshly made resolutions. Truthfully, it’s not hard to believe, especially as we are even further into the month. As we have all experienced at one time or another, it’s easy to get discouraged with our goals, especially after the initial enthusiasm starts to fade. You don’t want to be a quitter now, do you?
The secret to staying power is breaking down your long-term goals into smaller, more manageable milestones. What can you do today that will improve your situation by Day 365?
Brio Financial Group is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Brio Financial Group by the SEC nor does it indicate that Brio Financial Group has attained a particular level of skill or ability. This material prepared by Brio Financial Group is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed by Brio Financial Group are based on economic or market conditions at the time this material was written. Facts presented have been obtained from sources believed to be reliable. Brio Financial Group, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Brio Financial Group does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice. Please consult with your tax professional regarding your particular situation before implementing any strategies discussed.
Brandon Miller, CFP®, is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals. For more information: https://www.briofg.com/
Money Matters
Published on January 25, 2024
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