Getting Off to a Fresh Financial Start in 2024

Right before the new year, I had the pleasure of being asked to provide some financial tips to a broadcast audience, but rather than just list some tasks to perform, the hope was to leave some wisdom that could lead to long-term financial success. Many of us make new year’s resolutions with great intentions at the time, but quite often, the motivation to stick with the resolution fades as the year wears on. If you’ve ever been to a gym in January, you tend to see it at its fullest because so many people have resolved to exercise more in the new year; however, often by February or March, the crowd has thinned out to the usual attendance once again. The same type of scenario occurs regularly when people make financial resolutions. There is excitement and desire initially, but when it gets more challenging as the year wears on, it can be hard to sustain the momentum. That is why rather than just outlining a resolution or a set of tasks to engage in, it is valuable to think about what lies ahead as making a change in mindset or a lifestyle shift. The other analogy we can draw is people who want to eat better may go on a diet at the beginning of the year. The problem with a diet is that once you stop doing that diet, you are likely to go back to what you are accustomed to, and reverse whatever the diet did for you. Rather than a diet, health experts talk about making more healthy lifestyle choices. Like healthy lifestyle choices, financial lifestyle changes are much more sustainable and can serve you well for the rest of your life. With that in mind, in this first issue of 2024, we will provide a few tips and the principles you can incorporate into your lifestyle that will hopefully allow you to maintain your focus well past the start of the year.

Tip #1: Get Organized Financially
The Principle: Order breeds confidence and clarity.
Whether it is in your bedroom, your kitchen, or your desk at work, when your space is cluttered, it is much harder to operate effectively. Financial organization is a critical part of financial success. Having your financial house in order can consist of a variety of things, including but not limited to having systems to make sure your bills are paid in a timely manner, knowing where all of your financial accounts and contracts stand, having your estate plan in place, or having a written financial plan. You may not have the bandwidth to tackle all of items you need to do at one time, but if you take the time to work on the areas that need to be re-organized, it may help you see more clearly what you need to do to achieve what you want to financially to have a more fulfilling life.

Tip #2: Automate Your Savings Plan
The Principle: Automated systems can help you avoid making poor decisions.
A key to building wealth is being able to pay yourself because income alone does not allow you to build wealth. As the saying goes, “it’s not what you make, but what you keep”. Many people have a desire to save, but they take the approach that they will save what is left over after they’ve paid all of their expenses. In most cases, that approach doesn’t work well because by nature as humans, we are cultured to spend rathe than save. So, if there is anything “left over”, our tendency will be to spend it rather than save it. Therefore, if you want to ensure that you do save some money, it is best to “take it off the top” or “pay yourself first”. You can do that by automating your savings, much like is the case when an employer takes money from the employee’s check to go into a retirement plan account. When you don’t see the money, you aren’t tempted to spend the money, and in the process, you very likely can accumulate a more substantial amount whether that is in a savings account, investment account, or retirement account. Decide up front to make it automatic, take the decision in the current moment out of your hands, and you will thank yourself later.

Tip #3: Stay on Top of Your Credit
The Principle: Your credit reflects your financial character.
It may not seem fair, but how you are viewed by financial institutions is based on your credit profile. You may not be in the market for financing and feel like it doesn’t matter what your credit standing is, but that is not looking at the bigger picture. You credit doesn’t only come into play when you are seeking financing, but it can be a factor in lots of other ways, such as a residential lease, applying for insurance, and even for employment. Because of this, it is important to know where you stand with your credit and if improvements need to be made. You should pull your credit report at least 3 times per year, which you can do for free by requesting your report from the 3 major credit bureaus via www.annualcreditreport.com. Because what shows up from each bureau may not be exactly the same, it helps to get all three over the course of the year, and by spacing out the frequency of making the requests, you can discern where changes are being made. If you want to see your credit score, you can often access a score either through a financial institution or a credit tracking service. You should understand that there are many different credit scoring models, so if you see different numbers, that should not alarm you. What you want to make note of is how any particular score is trending over time, and hopefully it trends upward if you are making ongoing improvements.

Tip #4: Invest in Your Financial Education
The Principle: No matter how much you know, there is always more you can learn to be better.
Whether you are dealing with financial challenges or feel like you are in very good financial shape, there is benefit to increasing your knowledge through financial education. If there are areas of your financial life where you are falling short, increasing your knowledge base can help you improve in those areas. Even if you are doing well in a particular area, the financial world is constantly changing, and you can benefit from learning something new that can take what you are doing perhaps to a higher level. Getting yourself financially educated doesn’t mean that you are doing things wrong; it means that you are seeking to improve yourself to be better in the future than you are today. If you take that approach, not only is it likely to serve you well as you seek to build wealth, but it will also serve as an example to those around you and encourage them to seek financial growth, making a positive difference beyond yourself.

Stewardship Emphasis

Change requires intentional action, but lasting change comes first with a change in your mind.

The Empowerment Channel |Volume CCXXI | Dedicated to Promoting Financial Education through Stewardship