A new year is a new opportunity for financial prosperity. We are leaving behind living paycheck to paycheck and worrying about our finances in 2023.
What is financial prosperity?
Financial prosperity is all about building financial stability now and in the future. There are varying levels to achieving this goal, which can look different based on every person’s financial needs. Economic prosperity includes:
- Increasing your income.
- Managing your money efficiently.
- Having an emergency fund.
- Spending money according to your values.
- Having a solid financial plan for the future.
Steps to creating the best financial future for 2024
While financial freedom sounds like the ultimate dream, it is obtainable when you take the correct steps.
Creating a life where you are confident with your money takes time and discipline. Yet it’s essential to enjoy the process to maintain your monument.
Here’s how to create the financial life you’ve always wanted.
1. Leave behind bad financial habits
Biting our nails, overeating junk food, or binge-watching reality TV are typical bad habits that can slightly inconvenience your life. However, bad financial habits such as overspending, not having a savings goal, and relying too much on your credit cards are all bad habits stopping you from financial freedom.
To create better financial habits in 2024, focus on the financial habits you will change. Start with one habit, such as overusing your credit card, and give yourself three months or more to improve that habit. Some strategies include using only cash when shopping or leaving your credit card at home when you go out.
Carmen Perez, founder and CEO of the fintech company MUCH, says that not prioritizing retirement savings is another bad financial habit to break.
2. Stick to your budget
Budgeting can sound scary, but it’s the most helpful tool for managing money. According to Perez, “Budgeting helps you plan your money out much more effectively than planning it in your head. It also lets you understand where your money is going and if you’re efficiently managing the cash you bring in.”
To ensure budgeting success, look up different budgeting methods, and find one that best fits your financial situation. Additionally, budgeting apps can make money management easy and seamless.
3. Pritoize saving and investing
Living paycheck to paycheck is a vicarious cycle that can cause tremendous stress. Staying in this cycle often results from not making enough money and not prioritizing saving money.
For 2024, Perez suggests starting a sinking fund. “Sinking funds are a great way to save in advance for something without the stress of paying out of pocket at the last minute,” Perez says. “They are great to set up at the beginning of the year and can be automated!”
Sinking funds are created by setting aside a set amount each month. They work best for large expenses in the future. For instance, if you know you’ll need new tires in six months, you can start a sinking fund. This way, at the end of six months, you’ll have the money you need and won’t pay out of pocket.
Another aspect of saving money is prioritizing your retirement fund. With most employers, saving money for retirement is easy. Check with your company to see what kind of retirement plans they have for their employees. Companies can take money from your paycheck before receiving it and deposit it into a retirement account.
Entrepreneurs or self-employed individuals should consider opening an Individual Retirement Account (IRA).
With savings goals put into place, the next step to financial prosperity is investing. “There are plenty of resources helping empower women around investing and money in general online, and Secret Deodorant is one of them,” advises Perez.
4. Create a debt pay off strategy
Many of us have become comfortable with living with debt. We make our monthly payments and accept that as the way of life. However, living a debt-free life is possible with the right strategy.
Perez suggests two methods for paying off debt fast: the debt avalanche and the debt snowball. “With the avalanche, you’ll want to organize your payoff from the highest interest rate to the lowest interest rate, regardless of how much money you owe,” she explains. “Then, you’ll want to pay as much money to the debt with the highest interest rate on the list while paying the minimum on all the others until that first debt is paid off.”
Perze further explains that “for the snowball, you’ll organize your payoff from the smallest balance to the highest balance regardless of the interest rate. Then, you’ll put as much money as possible into the debt with the smallest balance while paying the minimum on all the other debts until the smallest balance is paid off.”
How to maintain good money habits all year long
Now that you know how to live a life of financial prosperity, maintaining these good habits all year is challenging. Creating financial goals can help you stay on track with your financial planning.
Another suggestion is to have money dates. Set aside a particular time each month to go over your finances. Set the date with a nice bottle of wine and your favorite ice cream. The key is to set an enjoyable environment. Create a money playlist of your favorite songs while you sit down to do your budget for the month. Perez says, “Money dates are a great way to establish positive financial habits. Money is 20% money and 80% psychological.”
Additionally, you can start journaling your thoughts and feelings about money. When you feel anxious or nervous about your finances, write down your emotions in your journal. Making smart financial decisions will be easier once you’ve felt through your feelings.