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What Are the Top Financial Goals for 2024?

Is it 2024 already? Time sure does fly, and so do our finances. With all the hustle and bustle of daily life, it’s easy to put our financial plans on the back burner. The new year is the perfect time to take stock of our financial situation and put a plan in place to optimize our finances throughout the year. By creating a plan now, you’ll have a clear path to follow and much less stress later on! 

 

This article will go over just a few basic steps you can take to get your finances on track. If you’re already doing any of these things, great! Perhaps a consultation with a financial advisor could help you fine-tune what you already have. There’s always room for improvement!

Establish an Emergency Fund

Many Americans have plenty of money in their various brokerage, savings, and retirement accounts. However, if you’re forced to liquidate funds from a retirement account, you’re potentially liable for taxes on any withdrawals, plus early withdrawal penalties – just for accessing your own money! If your funds are tied up in a brokerage account, you’ll owe capital gains tax on any earnings from any assets you sell, and if your funds are in a CD – well, you’re likely to owe a penalty as well. Paying penalties and taxes during an emergency won’t lead to the best feelings in the world.

However, that’s probably not the worst thing when it comes to an emergency. You need funds fast – you may not have time to log into your brokerage account, sell funds, wait for your account to settle, and then withdraw the funds – it could be too late by the time it takes to get all that done. You need cash now! Those funds are essentially worthless if you can’t access them immediately in case of an emergency. 

You should have two to three months of living expenses in cash that you can withdraw from your regular savings account at any moment. If you don’t have one already, it’s high time to start accumulating those savings as quickly as possible. A reasonable goal would be to establish a solid emergency fund by June. It’ll take some hunkering down, but it’s worth it.

Pay Off Your Credit Card Debt (or any high-interest debt)

There’s almost no point in investing if your high-interest debt is outpacing your return rates. Paying that debt down and off as quickly as possible should be your next highest priority. 

Let’s examine just how quickly high-interest rates can eat into your savings. You have $10,000 in credit card debt with a 17% APR. Here are Discover’s numbers based on how long it takes you to pay it off and how much interest you’ll have paid in the long run: 

$1,000 a month: Paid off in 11 months, $703 paid in interest. 

$750 a month: Paid off in 15 months, $998 paid in interest. 

$500 a month: Paid off in 24 months, $1,661 paid in interest. 

$250 a month: Paid off in 59 months… $4,594 paid in interest. 

Unfortunately, the last variant is the sad reality of so many Americans. The magic of compound interest should be utilized for oneself, not to make the bankers even richer! 

Debt is also a significant source of stress for Americans, and its psychological effects on Americans are immense and, unfortunately, largely unnoticed. American Psychological Association (APA) studies show that 46% of Americans with debt have a diagnosed mental illness, and there is a strong link between debt and anxiety, depression, and illness. 

More medical problems means more doctor bills and a further strain on your finances – leading you into a downward spiral that is extremely difficult to crawl your way back out of. 

For the sake of your long-term finances and mental health, extinguish that high-interest debt as soon as possible so you can turn the tables in your favor! 

Establish a Budget & Set Financial Goals

Entirely too many Americans are living without a budget, let alone sticking to one. And those who do have a budget and overspend are likely to use a credit card to cover those additional expenses (see point 2!). 

However, creating a budget is critical to avoiding the debt trap many Americans find themselves in. Knowing exactly what you spend your money on is the only way to accurately determine where you need to cut back – and then, once your savings are under control, you can figure out how much should go to investing or other savings goals. 

Once you finally have your finances under control and your high-interest debt paid off, you’ll finally feel free – free from fiscal stress, free from financial fears, and free to pursue your financial goals with confidence and clarity. You’ll feel like a new you! 

Speaking of goals – a primary component of a modern budget is your financial goals. Traditional financial planning focuses on saving up as much as possible over the long run. However, goals-based financial planning puts your individual goals to the forefront by choosing suitable investments based on when you will need your savings rather than just a faraway and vague retirement goal. 

Since it’s the beginning of the year, it’s a great time to sit down with a financial planner who can help you set both realistic short-term and long-term financial goals and craft an investment plan that can help you achieve those goals. 

With a goals-based budget in place, you’ll not only know how much money you’re spending and where but also how much to put into each kind of asset, making your finances overall much more efficient.

Maximize Your Retirement Plan Contributions

Taxes are a pain, and nobody loves paying them. However, the IRS gives us many ways to reduce our tax burden, and contributing to a tax-advantaged retirement plan is one of the best ways to do so. At your fingertips, you have, at the minimum, an IRA. You also likely have a 401(K) offered through your employer. By contributing to either of these retirement plans, you can reduce your annual taxable income, meaning you have more to invest. Those funds you save on taxes can then be used to generate additional compound gains over the years, drastically accelerating your ability to generate wealth and secure a prosperous retirement. 

Remember that you’ll owe regular income taxes on any withdrawals when you retire – and we don’t know what those rates will be like. Can we actually imagine taxes going down?

That’s why there is the Roth variant. With Roth, you get taxes out of the way before contributing to your retirement plan, and those funds can grow tax-free over the years. Yes, that also means tax-free withdrawals in retirement. 

So, what’s best for you? It often isn’t an either/or question. A careful mix of each kind of contribution can help you stay in the lowest possible tax bracket now and in the future. Additionally, you’ll want to think of your asset location – that is, what investments should go into what retirement plan based on their own tax status. As mentioned above, withdrawals from retirement plans are taxed as ordinary income, which is generally higher than capital gains taxation. 

So why would you want to put capital gains-generating assets like stocks and ETFs into an account that will generate regular taxable income or bonds that generate general taxable income into a brokerage account when they could be put into a tax-deferred or tax-free account? 

Of course, this isn’t easy to figure out on your own, and the examples we give above may not suit your individual situation. That’s why it’s recommended that you sit down with a dual-focused financial advisor and CPA who can figure out the optimal contribution and asset allocation of your funds and assets. 

In Conclusion

2024 is already shaping up to be a whirlwind year – geopolitical conflicts swirl around the globe, interest rates are showing high volatility, and the advancement of artificial intelligence promises to upend long-established norms. With all of these stressors lurking around every corner, there’s at least one you can take control of – your finances. 

Establishing an emergency fund, eliminating high-interest debt, adhering to a disciplined budget to achieve set financial goals, and maximizing retirement contributions are foundational goals that help set the stage for a prosperous financial future – and improved physical and mental health. 

The journey to financial well-being is most effective with a guide by your side. We encourage you to sit down with a financial and tax professional who can help you get things under control. By doing so, your wealth has the potential to grow more robustly, you can experience a significant reduction in financial stress, and ultimately, you can experience a better quality of life. Don’t let another year pass by – schedule a consultation by clicking the button below!

For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Certain information is based on third-party data and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The scenario mentioned in this presentation is not an actual client experience. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this presentation.

About the Authors

  • Douglas Walters

    Doug is the Managing Partner of Walters Strategic Partners, LLC, a licensed Registered Investment Advisory firm. Doug is a licensed Certified Public Accountant (CPA) in the state of Florida and holds a Series 65 Investment Advisor Representative securities license. He is also a member of the AICPA. With over 28 years of experience as a CPA, he believes investment decisions should be based on decades of peer-reviewed research rather than relying on the latest “hot tip” from media outlets. This empirical evidence puts the science of investing to work for his clients.

  • Jose Joia

    Jose M. Joia is a Wealth Advisor at Walters Strategic Advisors, LLC. As a member of the team, Jose’s responsibilities involve comprehensive wealth management, planning and customer service. He has over 6 years of industry experience specializing in planning and solving unique issues his clients encounter. Jose has experience serving individual clients, business owners and non-profit organizations.

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