Are you ready to take control of your finances this year? Budgeting could be the key to your financial success in 2024. We’ll help you navigate the complexities of budgeting, tax planning, retirement contributions, and more. Whether you’re a seasoned financial expert or a beginner looking to improve your financial literacy, this guide will provide you with the answers you need to make informed decisions about your financial future.
Update Your Spending Plan
One of the first steps to financial success is updating your spending plan. Many people believe that earning more money will solve their financial problems, but this is often not the case. Instead, it’s crucial to manage your money wisely, regardless of your income level. If your financial obligations have changed over the past year, it’s time to adjust your spending plan accordingly. This involves evaluating your fixed expenses and discretionary spending, and identifying areas where you can cut back.
Gather Your Tax Documents
With tax season fast approaching, it’s time to get organized. If your financial situation has become more complex over the years, it’s especially important to start the process early. Gather all necessary tax forms, including W2s from all employed jobs and 1099 forms for any contract work or side gigs. Also, remember to keep track of any other side income and potential deductions.
Adjust Your Retirement Contributions
As your income increases, so should your retirement contributions. The contribution limits for work retirement accounts, such as a 401k and a 403b, have changed for 2024. If you’re under age 50, you can contribute up to $23,000 annually, and if you’re over age 50, you can contribute up to $30,500. Be sure to adjust your paycheck deductions accordingly to maximize your contributions.
Invest in Your (backdoor) Roth IRA
Investing in a Roth IRA is another excellent way to secure your financial future. Unlike work retirement accounts, a Roth IRA is not tied to your employer, giving you more flexibility and investment options. However, due to income limits, many high earners cannot contribute directly to a Roth IRA. Instead, they can make contributions indirectly through a ‘backdoor’ Roth IRA.
Set up Your Automatic Savings
Setting up automatic savings is a simple yet effective way to ensure you’re consistently saving money. Whether you’re saving for a down payment on a house, planning a vacation, or building an emergency fund, automatic savings can help you reach your goals. Consider keeping your savings in an online high-yield savings account or money market fund to earn interest on your savings.
Consider Opening a Solo 401k
If you have additional sources of income from a side gig, consider opening a solo 401k. This allows you to invest a portion of your self-employed income in a tax-efficient way. Remember, you can have different employer contributions for each source of side income, in addition to your main job’s retirement account contributions.
Re-evaluate Your Debt Reduction Plan
Debt can be a significant obstacle to financial freedom. Instead of avoiding your debt, take the time to re-evaluate your debt reduction plan. Look for ways to pay off your debts sooner, such as enrolling in a loan forgiveness program or increasing your monthly payments. The most important debt to reduce is that with an interest rate over 8%.
Update Your Estate Plan
Finally, don’t forget to update your estate plan. As your life changes, so should your estate plan. Make sure your family is taken care of by updating your living will, setting up a trust fund, choosing guardians for your children, and updating the beneficiaries on your investment accounts.
Seize Control of Your Finances
By following these steps, you can take control of your finances and set yourself up for success in 2024. Remember, financial success is not just about making more money; it’s about making informed decisions and managing your money wisely. So, start checking items off your financial to-do list today, and watch as your financial future transforms!
