Kick start your 2024 finances with these 5 simple steps

Every year, the two most common New Year’s resolutions are to get into shape and lose weight. How long do those good intentions last? On average, less than three weeks.

For those who make it all the way through January without quitting, 80% will have set aside their good intentions shortly after Groundhog Day. 

If those good intentions include paying down debt or saving for retirement, the same psychology applies: we start strong, but pretty soon the money we were going to put away from every paycheck becomes every other paycheck, and then once every couple of months, and then nothing. Because life happens.

How can you make New Year’s resolutions about your financial life that you’ll follow the entire year?

By turning a large resolution, such as, “I’m going to get my financial life together,” into a series of smaller ones.

This may sound daunting, but if you tackle these five things, one at a time, you can feel better about your finances than you’ve ever felt before.

As an ancient Chinese proverb notes, “a journey of 1,000 miles begins with a single step.” So does a journey to financial freedom and independence.

Resolution 1: Start small

You wouldn’t wake up one morning and be able to run a marathon. You’d start by walking or jogging for a few minutes. You’d gradually work your way up to running a mile, then two miles, until one day you were capable of running 26.2 miles (the length of a marathon).

Financial resolutions are the same. Don’t resolve to save $1 million for retirement. It’s too easy to get discouraged and give up.

Start by having 1% taken out of your paycheck for your employer’s 401(k).

Suppose you make $60,000 a year. That’s $50/month (or $25 per paycheck if you’re paid twice a month). You’ll barely notice that $25 is taken out for your retirement each paycheck.

In a couple of months, bump that to 2%, or another $25 per paycheck, then 3%. Every time you get a raise or bonus, bump it again. You won’t notice the extra 1% deduction, but one day you’ll realize you’re saving 10% (or more) of your salary for retirement. You’ll be surprised how much you’ll have after a few years.

Resolution 2: Get organized

The simple act of getting your finances organized has many benefits: it can create peace of mind, save you time, help you make smarter and more informed decisions, and allow you to better adapt to changes in your life.

And it really is a simple act. By following three easy steps, you’ll not only have a complete picture of your finances, insurance, taxes, and other parts of your financial life; you’ll also have the information you need to plan for the future with confidence.

Those steps are: follow the advice in the article, look at future milestones, and tackle one thing at a time. Follow them and you’ll feel more in control of your money than you’ve ever felt before.

Resolution 3: Spend intentionally

One of the keys to financial happiness and security is aligning your finances with the things that are most important to you. But that doesn’t mean saying no to the fun stuff. It means saying yes to the things that are important to you. Yes to peace of mind. Yes to the future you want. It means thinking about your spending and having a good understanding of where your money goes.

The first step is to track where you spend your money, whether that’s just with pencil and paper or one of the many apps that helps you track your finances. Follow your income and expenses for a couple months and you may be surprised to see where it all goes. That way you’ll have all the information you need to decide whether you’re spending on the things that are most important to you or not. Those insights can help you improve your financial life.

Resolution 4: Talk to your partner

Love and … finances? While managing money in a partnership can be challenging, and not always romantic, getting on the same financial page is crucial to maintaining a healthy, long-lasting relationship with each other and your finances.

The first step is to understand the psychology of money. We all absorb lessons from our parents about money as children, if we don’t realize it. This simple quiz will help you uncover just what those lessons were and how they affect every financial decision you make.

Once you understand what money means to you, it’s time for you and your partner to understand each other’s feelings about money better. It’s easier than you think. With just a few simple steps, you’ll learn about your own money attitudes, where your partner is coming from, and how you can make financial decisions together that work for both of you.

Resolution 5: Teach your children

One of the most important things parents can do for their children is teach them healthy money habits early. Children start learning money habits from you by the age of three and have formed many of their attitudes about money by seven.

Learn how financial planners teach their children about earning, saving, spending, giving, and investing. They take their children to the grocery store, open savings accounts with them, and have open, age-appropriate discussions about money and finances. They teach them the value of delaying gratification by saving up for larger purchases.

Once you’ve done all of that, you’ll begin to have answers that will help you succeed in the coming year. You’ll know which decisions worked out, which ones you’d change, and what you’ve learned that will help you make smarter decisions in 2024. You’ll know which good money habits you want to keep and which habits are holding you back.

Making and keeping financial resolutions can affect every aspect of your daily life, giving you choices and a new feeling of control. So start small, get organized, and enjoy the financial life you deserve.

If you need help, a CFP® professional from Facet can guide you during every step of your financial journey.