The new year is a great time to reflect on the past and look forward to the future, both personally and financially.
Here are five tips for kicking off 2024 with a financial fresh start:
1. Revisit your Goals
At Money Coaches Canada, we always like to start with your goals. After all, your money is really just a tool to help you achieve them. What were you hoping to work towards last year? What did you achieve and what are you still working on? What new goals would you like to set for yourself and what do you need to do to reach them? Some goals might be specific, like ‘Contribute $5,000 to my RRSP before February 29th.’ Other goals might be more subtle, but just as important, such as ‘Feel more in control of my finances in 2024.’ In either case, being clear on your objectives is a good place to start.
2. Update your Cash Flow
Once you’ve determined your financial priorities for 2024, you’ll want to get a sense of how much money you have available to put towards these goals. If you’ve worked with us in the past, you could update your Spending and Savings plan to reflect any changes to your income and to your fixed and variable expenses. This step is especially valuable this year, as high inflation has increased the cost of almost everything. Even families with higher incomes may need to allocate more to essentials like groceries and gas and save more for big ticket items like travel and home renovations.
3. Start or Maintain your Emergency Fund
It’s always a good idea to have adequate funds set aside for a rainy day, but that might be particularly true this year. Canada is hoping to avoid a recession in 2024, but interest rates likely won’t start coming down until the second quarter of this year, at the earliest.
An emergency fund can provide a financial cushion if you experience any disruption to your income. It can also help you avoid the need to sell investments in a down market. A general rule-of-thumb is to keep three to six months’ worth of living expenses in a safe, accessible account, such as a high interest savings account.
4. Review your Debts and Investments
This is also a good time to review any debts you’re carrying. Interest rates have risen quickly over the past two years, which may require you to adjust your payments on variable rate mortgages or Home Equity Lines of Credit (HELOCs).
Also watch out for statements from your investment firm showing your accounts’ asset mix, performance, and fees. Changes to the values of your various investments over the past year may mean you’ll want to rebalance your accounts back to your target asset mix. We also recommend comparing your portfolio’s performance against an appropriate benchmark and understanding all the fees you are paying for your investments. If you work with an advisor, be sure to reach out if you have questions. Money Coaches Canada can also provide a second opinion on your portfolio through our Investment Report Card™.
5. Prioritize Your Wellness
Many of us have To Do lists that seem to go on forever. Sometimes managing our careers, families and other demands can make us feel overwhelmingly busy, but not overly fulfilled. In 2024, try making time for yourself a priority. Put some thought into which activities bring you peace and joy and then schedule them in as firmly as you commit to your other obligations.
Also keep in mind that taking care of your finances can benefit many other aspects of your life. When you’re not worried about your cash flow or wondering if your retirement plan is on track, you have more time and energy for the people and things that matter most to you.
If you need help navigating your personal path to financial wellness, a Money Coach may be the answer. Contact us for a free consultation.
