Your 2024 financial check-in: A step-by-step guide to keeping your finances on track

Author: Randolph Taylor

Source: MoneySense

The end of the year is an opportunity to do more than just think about taking up a new hobby or fitness routine come January. Just as you reflect on the past year, you should also reflect on your finances.

The past year has been tough; rising interest rates and the high cost of living mean you might not have been able to meet the financial goals you set for yourself in 2023. However, there’s still time to set yourself up for success in 2024!

While you can’t control the uncertainties of the economy, you can create a well-structured plan to help achieve your financial goals. Here are the steps to take to help set your finances on the right track for the new year. 

1. Evaluate your financial goals

Goal-setting can be successful if you’re agile with strategy and check in on your status regularly. It’s important to evaluate the progress made on your financial goals at the end of December and beginning of January, and to set new milestones for the year ahead. Questions you can ask yourself about your 2023 finances include: 

1. What did you accomplish from your 2023 goals?
2. Where did you fall short?
3. What habits worked?
4. What do you wish you had done differently?
5. How can you increase your financial knowledge? What do you need to learn more about?
6. What unexpected things happened, and how can you plan for them next year?
7. What increases in the cost of living impacted your budget, and can they be mitigated in the year ahead?
8. What changed in 2023 that you need to plan for financially in 2024 (i.e., life events such as a new baby, job loss, rising mortgage costs)?
9. Are you on track to meet your long-term financial goals? If not, what adjustments do you need to make?
10. Did your spending in 2023 align with your goals and values? 

Remember, circumstances can change. Stock markets rise and fall, unexpected home or car repairs inevitably arise, promotions and job losses happen, and disability, divorce or death can cause the best-laid plans to go awry. So, don’t worry if you have to alter or change the path to achieving your goals!

It’s also important to make sure your goals are SMART; that is, specific, measurable, attainable, relevant and time-based. SMART is about realistic and achievable goal-setting to ensure you can focus your energy, get clear on your plan of action, and measure your progress. You should also make sure your goals are not arbitrary; base them on your personal circumstances and avoid comparing yourself to your family and friends.

Now that you’ve evaluated what worked and didn’t over the past year, the next step is to create goals that resolve anything from 2023. Here are examples of strong money goals based on the previous year’s finances: 

• Keep up with automatic transfers for savings, since it worked in 2023
• Build a sinking fund for a vacation so you can avoid unnecessary credit card interest like last year
• Stop getting financial advice for investments from social media and contact an advisor instead
• Take a financial literacy course
• Find an app to make sticking to a budget easier
• Cut back on streaming services and use that money to increase your budget for groceries
• Build an emergency fund (for those surprise mechanic bills!)
• Pay off any unsecured personal debt within a year before welcoming a new baby
• Prioritize paying utility bills on time to stay out of debt 
• Explore passive income opportunities to help save for retirement 

Many people make the goal to reduce their debt. To create a pay-off plan, add up all your debt and determine how much you want to reduce it and by when. Unsure what goals to set? Consider talking to a professional in the area of personal finance.  

2. Refresh your budget for 2024

Just like with other aspects of your well-being, it’s important to regularly check up on your progress when it comes to managing your finances and paying down debt. Personal circumstances can change, and your budget will likely need a refresh every year to ensure its accuracy and keep you on track. 

A budget can help you plan for expenses and provide insight into your spending habits, making it easier for you to achieve financial goals, such as building an emergency fund, paying down debt or saving for a down payment on a home.

First, make a list of your income and expenses. Determine how much money you have to spend each month and compare it with how much you pay for various bills and items during that same period. In your expenses, be sure to account for paying back any debts. Like many people, you may not know where all your money goes after covering obvious living expenses such as rent or a mortgage, car payments and utilities. It is important to put your income, expenses and debt down in writing to help yourself track your spending behaviour. 

Everyone needs a purpose for their personal budget, and if you have unsecured debt, such as loans or outstanding credit card balances, your first priority should be paying it down. If you’re aware of your spending habits, have set your money-saving goals and know how long it will take to pay down any unsecured debts, your short- and long-term financial goals will feel more achievable.  

3. Remember to set money aside each month

Whether you’re saving for retirement, an emergency fund or a vacation, putting aside money every month helps you tackle expenses without sacrificing your debt payment obligations.

Every time you get paid, take a small percentage and put that money into a savings account, like a tax-free savings account (TFSA) or high-interest savings account. Aim to set aside between 5% and 10% of your monthly income to put towards savings. However, this number can vary based on individual financial situations. Your bank or financial institution can help you set up automatic withdrawals to take money out of your chequing account and put it into a savings account every time you get paid. 

4. Review your credit card and bank statements

Looking to reduce your expenses in 2024? Be sure to review your credit card and bank statements each month. By knowing where your money is going, you’ll be able to recognize where you can cut back. 

Auto-payments are a helpful setup for many to stay on top of their bills. However, you may end up paying for something you don’t use anymore, like a streaming service or gym membership. Be sure to evaluate your auto-payments and cancel any services you no longer need. For those services that you’re keeping, give some thought to how much of an increase to expect in 2024. By reducing or decreasing your expenses, you’ll be able to boost your savings and/or pay off debt sooner, which means you have a better plan for your financial goals.

This article was written by Randolph Taylor from MoneySense and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.