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The economic landscape seems to be off to a better start in 2024, with inflation abating and Federal Reserve rates holding steady, but many people are still feeling the strain. With ongoing financial stressors, Americans plan to put an emphasis on their finances in the new year, according to the 2023 New Year’s Resolutions Study from Allianz Life.
Indeed, nearly half of Americans surveyed — 48% — say they are likely to make and keep a resolution to manage their money better or save more in the coming year. This is up from 43% in 2022 and 33% in 2021, according to Allianz.
Top priorities include increasing savings and paying down debt. Respondents said they could improve their finances in 2024 by building up an emergency fund (17%), paying down credit cards (16%) and increasing retirement savings (17%).
But there’s a trick for meeting these goals.
“Many people make resolutions that are far too vague to be successful,” said Kelly LaVigne, vice president of consumer insights, Allianz Life. “Saying you want to save or invest more does not have enough details for you to take action or be held accountable.”
Have Specific Goals
“While you may want to achieve those abstract goals, you need the specific steps to make sure you’re continuing to make progress toward [them],” added LaVigne, noting that what holds many people back from sticking to resolutions is that they don’t have a clear enough picture of their finances to create that specific plan.
“For example, if you want to increase your money set aside for retirement, you may want to increase your 401(k) by 1% for the coming year. Or if you want to add to your emergency fund, you could make your resolution to save $100 a week that will add up to $5,000 at the end of the year,” said LaVigne.
Staying mindful of the idea that increasing 401(k) contributions will set you up for a comfortable retirement, or that adding to your emergency fund will to ensure you can pay for big expenses without going into debt, will help you stay focused on your goals and track your progress.
Know That Life Is Unpredictable
As LaVigne noted, there will always be unexpected risks to your financial future. A strong financial plan will help you weather those unexpected events so that you can keep moving toward your goals without being derailed.
“That means taking steps toward your financial future in stride — don’t make investing your top priority when you don’t have three to six months of living expenses saved in cash,” said LaVigne. “If you don’t have that foundation, then bumps along the way can really set you off course toward your long-term financial stability.”
For instance, LaVigne underscored the effect that restarting student loan payments is having on Americans’ finances.
“We haven’t been through this series of events before where payments were put on hold. So, to hear that restarting payments will make it harder to make ends meet and many will reduce retirement contributions is notable,” he said.
Give Yourself Some Grace and Know Your Numbers
According to Bri Conn, Childfree Wealth specialist and investment advisor representative, the first thing you should do when it comes to any financial goal is give yourself grace.
“Starting your financial journey is hard. Be proud of yourself for taking the first step. Use that grace when you get overwhelmed, and instead of giving up altogether, take a step back,” said Conn. “It’s okay if you need to take a few moments to recenter yourself and breathe on this journey.”
Conn added that whenever you’re trying to save, give yourself room for fun.
“A line for fun money in your budget can help you from feeling burned out. Planned fun spending is okay and can help you stick to your savings goal,” she added.
Finally, Conn recommended reviewing your bank and credit card statements because you need to know where your money is going before you can set a realistic savings goal.
“Setting a goal of saving $40,000 without any knowledge of where your income goes may not be realistic,” she said. “Having numbers you can look at to see how much you can reasonably cut out and save is going to help you set achievable goals.”
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