Setting Yourself up for Financial Success in 2024

Your Net Worth is a metric that you should know and continue to track, because it is the ultimate indicator of our wealth. 

Instead of measuring your wealth compared to your neighbor or friends based on what you see on the outside, your net worth is the real deal. The reason I love tracking my net worth so much is because it allows me to see my progress overtime. Often we can be so consumed trying to pay down debt, or save money that we feel like we aren’t necessarily going anywhere… when in fact your ARE growing your wealth with your hard work, and your Net Worth will help illuminate that success.

I personally track my Net Worth each quarter, using my Net Worth Template.

GET CLEAR ON YOUR GOALS

Now that you have a better understanding of your current state finances between your detailed information and your overall Net Worth, we can look forward and start to create goals. Start by brainstorming all the things you’d like to accomplish – and don’t limit yourself.. now is not the moment to determine the realistic-ness of things, it’s just to get things on paper! 

From here, choose just ONE financial goal that you would like to focus on first. Often I see that we try to accomplish everything, and it’s so overwhelming that we end up not accomplishing much at all. So let’s keep it simple and just give all our focus to ONE. Once we start to feel the momentum we can start working on the next. Here is a brief “order of operations” to help guide you on which goals you may want to consider focusing on first: 

1. Building a mini- emergency fund
2. Paying off high interest rate debt (think over 7%… credit cards!)
3. Invest the company match percentage in your 401k 
   • If you do not have a 401k, open an IRA & start investing
4. Build a fully funded emergency fund (3-6 months of living expenses) 
5. Increase your investing contributions
   • Increase your 401k contribution or your IRA contribution 

Once you know what goal you are going to focus on first. Reverse engineer the goal so that you know exactly what you need to do each month, week and maybe even day to accomplish that goal based on the timeline you’ve set!

For example you created a goal to save $5,000. Don’t just stop there and hope that will happen, that is not enough. You need to determine a timeline for that goal, that will help determine how much you need to save on a regular basis. So for example we take it a step further and perhaps we determine that you already have $1,000 saved, so you have $4,000 to go… and you would like to accomplish this in 5 months time. 

Reverse engineering would tell us we need to save 

• $800/mo ($4,000 ÷  5)
• OR $400 per biweekly paycheck ($4,000  ÷ 10)
• OR $200 per week ($4,000  ÷ 20).

Do you see how now our goal is to save $200 per week for 5 months, as opposed to a general statement of “I want to save $5k”? After we reverse engineer, and break our goal into bite sized pieces, it makes it feel much more attainable.

AUTOMATE 

Once you’ve determined your goal(s), automate as much as you can to make your life easier!! This entails setting up direct deposits, transfer or payments. Back to our example of saving $5k, and doing so in $200 increments every week. Instead of manually having to remember to do this each week, you could choose to set up a new direct deposit rule for your paycheck. Now each week when you get paid $200 goes directly into your savings account, and the remainder into your checking. Another option is to create an automatic transfer within your bank account, indicating how frequently you’d like to make a transfer to savings and for how much. 

Automation makes your life easier, and better ensures that the action needed to accomplish your goal is going to take place! 

 OPEN A HYSA

The beloved high yield savings account. The perfect place to store your Emergency fund. If you do not yet have a high yield savings account, you need one… it’s a no brainer. Learn more about this type of account in my HYSA blog post.