FIVE POWERFUL FINANCIAL RESOLUTIONS TO FOLLOW IN 2024 12 January 2024
Released On 24th Jan 2024
For many of us, the beginning of 2024 means making new year resolutions. You might decide to improve your diet, find a better work-life balance, or take up a new hobby.
But have you considered your financial resolutions?
Setting yourself goals and changing certain behaviours could help you improve your financial plan in 2024 and beyond. Ultimately, those goals are unique to you and your own situation, but there are some important considerations that might give you a bit of inspiration.
1. Rewrite your budget
Creating a budget is one of the most common steps you can take to gain control of your finances. It allows you to divide your income and manage your spending, so you can cover short-term expenses while also working towards long-term goals.
As certain costs have risen in the recent years, your outgoings may have changed considerably meaning your budget is no longer suitable, and the start of a new year is the perfect time to review it.
The 50/30/20 rule is a good guide to help you create a new budget:
50% of your income should be spent on “needs” including your mortgage, utility bills, and food. 30% can be spent on “wants” including eating out or going on holiday.
The remaining 20% could be set aside for the future in the form of savings and investments.
Often, when costs rise, it’s the final 20% that people use to bridge the gap between their income and their outgoings. Yet, this means that you are no longer working towards your long-term goals.
As such, you may want to review your budget and, if necessary, find other areas to cut back so you can still prepare for the future.
Most importantly, make it a resolution to stick to your new budget. See our recent article on Five tips for sticking to your resolutions in 2024 which you may find helpful.
2. Use important allowances before the end of the tax year
The beginning of a new calendar year means that we are approaching the end of the financial year.
On 5 April 2024, several important tax-free allowances reset and while some unused allowances can be carried over to the following year, many can’t.
Allowances you may want to make use of include your:
ISA Allowance
Dividend Allowance
Capital Gains Tax (CGT) Annual Exempt Amount
Personal Savings Allowance
Pension Annual Allowance
Gifting Annual Exemption.
Planning ahead and making full use of these allowances could help you mitigate a large tax bill. So, don’t leave it until the very end of the tax year before using these allowances, start as early as possible.
3. Regularly review your estate plan
Estate planning is something that many of us neglect because it’s not the nicest subject to think about.
In fact, a new report from the National Wills Register revealed that 42% of UK adults had not discussed what should happen to their estate after their death.
If you are part of this group, you may want to consider creating a will as soon as possible. This ensures that your estate is divided according to your wishes. It can also protect your loved ones from a protracted legal process when you pass away.
Even if you already have an estate plan, you may want to make a resolution to review it more often as your will may be out of date if your circumstances have changed. For example, you may have more children or grandchildren, or perhaps you have moved into a different home.
You may want to add new family members to your will, and it’s important that you include all your assets in your estate plan.
Additionally, you may change your mind about who should be the executor of your will or how you want things to be divided.
By regularly reviewing your estate plan, you can ensure that it reflects your current wishes and your life circumstances.
4. Update your protection policies
Protection such as life insurance offers a valuable shield against financial uncertainty for you and your family. Unfortunately, this is another aspect of financial planning that people often set up and forget about. As life circumstances change, make sure to regularly review and update your protection policies.
This includes:
Having a child
Moving into a new home
Getting married or divorced
A significant change to your income or outgoings
Retiring.
These life events could affect the level of cover that you and your family need to maintain your current standard of living and meet financial obligations.
As such, it may be beneficial to make a habit of reviewing your protection each year to ensure that it is still suitable.
5. Have more conversations about your wealth
Many of us are still reluctant to talk about money, even with our loved ones. Indeed, a survey from Klarna found that 32% of UK adults said they were uncomfortable discussing their finances with friends and family.
Yet, when you have conversations about your wealth, you create excellent opportunities to improve your own financial plan and support others.
For instance, talking to young children about money could help them develop positive behaviours from a young age. Discussing your finances with your parents or adult children could help you find more effective ways to transfer your wealth between generations.
Talking to a financial adviser about your wealth could also make it easier to plan for the future and reach your long-term goals.
That’s why you may want to make a resolution to start more open conversations about your wealth in 2024 and beyond.
Get In Touch
If you want to set goals for the year ahead, we can help you decide on some financial resolutions.
Email us at advice@milstedlangdon.co.uk for more information.
Please Note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions.
