By Rodney A. Brooks – Monday, Jan. 8, 2024
It’s time for those annual New Year’s resolutions – the goals that almost no one sticks to after January. But there are some easy-to reach financial resolutions that can help retirees make the most of precious post-retirement dollars. So, let’s get started with five easy-to-achieve financial resolutions for 2024.
Create a budget. It’s the most important thing anyone can do, says Michael Berkhahn, vice president at Graham Capital Wealth in Tampa, Florida. “You have the previous 12 months or 2023 and can get a true understanding of what that individual or that family is spending on a monthly basis,” he says. “I don’t think a lot of people realize what they’re actually spending on a monthly basis on average because maybe not all bills are paid out on an ongoing monthly basis.”
“I go back to Warren Buffett,” he says. “A while ago he said the first rule of investing is don’t lose money, and then he said the second rule is don’t forget the first rule. So, I say when it comes to your New Year’s resolution, when it comes to financial planning, the first rule is to create a detailed financial plan.”
Start an emergency fund. “I’d revisit the emergency fund and ensure there are 3-6 months’ worth of expenses for a rainy day,” says Mitch Katz, wealth manager advisor and partner at Capital Associates in Bethesda, Maryland. “For those without emergency funds, start building one. Even if it’s just $50-$100 per month to start. Whatever they can contribute is better than doing nothing at all.”
Check your credit report. “Typically, people can check for free at freecreditreport.com/ and while checking, close any old credit cards or store cards with high interest rates,” says Katz. “While they are at it; reassess all of the monthly subscriptions. These dollars can be repurposed to the emergency fund.”
Don’t buy things you don’t need just because they’re on sale. “One on my financial New Year’s resolutions is to stop buying clothes and kitchen gadgets just because they’re “on sale,” says Jeanne Thompson, a retired Fidelity Investments executive who is now an author, speaker and podcaster (Fab Fridays Live w/ Jeanne and Martha). “It always seems like a great deal, one that I can’t pass up,” she says. “But often it’s not something I needed or wanted, and I only buy it because it’s “on sale.” It’s never part of my budget and often I don’t wear the clothes or use the kitchen gadget and end up giving it away. Therefore my 2024 resolution is to stick to my budget and not buy things just because they’re on sale!”
Pay off high interest debt. Today’s high interest rates make it imperative to pay off your credit cards or any other high interest debt obligations, says Berkhahn. “Because there’s no investment out there that someone can make that’s guaranteed to get to 20%,” he says. “And if you’re sitting there with $10,000 or $20,000 in credit card debt, and racking up at 20% or 25% APR, you’re much better off trying to pay that down as quickly as you can.”
Finally, says Katz, when people set New Year’s resolutions, most set them for the short term and only keep them for a few weeks or months at best. “To be in good shape, you need to resolve that you’re going to do these things for many years to ensure you meet your long-term financial goals.”