The start of the year is an ideal time to reassess your financial goals and set a clear path toward achieving them. While New Year’s resolutions often fade after a few months, there are some straightforward steps you can take to improve your financial wellbeing in 2024. These actions are simple, yet they can make a big difference over time.
Review Your Financial Goals
Setting financial goals is just the beginning of a successful financial plan. The next step is regular review and adjustment. Life is dynamic, and as your circumstances evolve, so too should your financial plan. Before diving into specifics like how much to invest or the level of risk you’re comfortable with, take a moment to reflect on what financial success looks like for you.
A strong financial plan is built on clear, meaningful goals. Now is a great time to reflect on what you want to achieve in the long term and make sure your current financial plan aligns with these aspirations.
Get Organized and Track Your Assets
With life moving quickly, it’s easy to lose track of all the financial accounts and investments you have accumulated. Studies show that a significant number of people have lost track of pensions or other assets. The start of a new year offers a perfect opportunity to take stock of everything you own and ensure that you know what you have and where it’s located.
Take time to review your pensions and investments. Check how much you’re contributing, where the funds are invested, and whether the investments are still aligned with your goals. Knowing exactly where you stand financially will give you confidence and might even reveal opportunities for growth or optimization that you hadn’t noticed before.
Assess Your Protection Plans
Life is unpredictable, and the past few years have shown us how quickly circumstances can change. Major life events like moving homes, changing careers, or expanding your family can affect your financial needs, including the protection you require. For most people, significant changes happen every few years, yet many don’t regularly review their protection needs.
Take a moment to reassess your protection plans. Ensure that you have the right coverage in place to safeguard your family and assets. Life insurance, critical illness cover, and income protection are all essential parts of a well-rounded financial plan. Adjusting your coverage as your circumstances evolve will help ensure you’re adequately protected.
Maximize Your Tax Allowances
Each year provides a fresh opportunity to make the most of your tax allowances. January is an ideal time to begin this process before the end-of-year rush. Whether you’re saving for retirement, managing your estate, or planning your retirement income, tax allowances can significantly impact your financial strategy.
Some allowances are “use it or lose it,” like the annual gift allowance for inheritance tax (IHT). Others, such as the pension annual allowance, can be carried forward (with some restrictions). Be sure to utilize these allowances in the most tax-efficient way possible to help you reach your financial goals more effectively.
Review Your Will and Beneficiaries
While life admin often gets pushed to the back burner, updating your will and checking your beneficiary nominations should be a priority. A will ensures that your estate is distributed according to your wishes, potentially reducing the tax burden on your heirs. Additionally, a power of attorney allows someone you trust to make decisions on your behalf if you are no longer able to do so.
Take the time to review and update your will and beneficiaries on pensions, life insurance policies, and other financial plans. Circumstances change, and it’s essential to ensure your wishes are reflected in all your legal documents.
Conclusion
Financial wellbeing is a continuous journey. While you may not be able to complete all your financial resolutions in the first few months, setting small, achievable goals can lead to significant improvements throughout the year. Taking action on these simple steps will give you more control over your financial future and peace of mind that you’re on the right path.
