With the new year 2024 already underway, most of us are making or hearing about common new year resolutions such as joining the gym, quitting smoking, traveling more, or learning a new skill or hobby. While all of these resolutions are fine (as long as you don’t break them the next day), there are some much-needed financial moves that you can turn into financial resolutions for the new year 2024, especially after the COVID pandemic, mass layoffs, and recession fears served as a wake-up call in recent years.
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Beginning in 2024, these five money resolutions can help you achieve financial independence and lay a solid financial foundation for the coming year.
Creating an emergency fund for your best financial friend
What will get people to start saving for an emergency if the COVID pandemic, recession fears, and mass layoffs aren’t enough? Life’s uncertainties remind us every now and then why an emergency fund is an absolute necessity. This is the first step toward financial independence. An emergency fund serves as a safety net in times of financial crisis, such as a sudden job loss, severe illness, disability, or significant pay cut. An emergency fund can save you in all such adverse financial events that can temporarily impede your income inflow by allowing you to continue with your recurring monthly expenses.
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Begin investing with whatever amount you have available
Compound interest was once referred to as the world’s eighth wonder by Albert Einstein. Those who comprehend it earn it, while those who do not pay for it. The magical power of compounding has remained one of Warren Buffett’s key principal investments. The sooner you begin investing, the more time and space you give compounding to work its long-term magic for you. It is one of the most powerful weapons, and every wealthy individual swears by it. By adding interest earned back to the principal, compounding increases the value of your invested money, resulting in exponentially greater returns. This is especially effective in the long run.
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Purchasing a life and health insurance policy as soon as possible
Insurance is not a choice; it is a requirement for all people, regardless of age or income. Rather than making excuses, make purchasing life and health insurance a priority in 2024.To begin, the primary goal of purchasing life insurance is to provide your dependents with a replacement income in the event of your untimely death. Make sure your life insurance policy covers at least 15 times your average annual income. Term life insurance is preferred over other types of life insurance because it offers a high level of coverage for a low premium. Second, in addition to term insurance, health insurance is essential.
Taking advantage of a credit score’s money-saving potential
When we think of assets, the first things that come to mind are real estate, gold, stocks, and so on. But what if we told you that you could own an asset without investing any money? In fact, that asset also saves you money!
Your credit score has become one of the most important parameters considered by banks and other financial institutions when evaluating loan and credit card applications over the last decade or so. As a result, good credit scores, typically 700 or higher, are no less than a critical financial asset with the potential to yield multiple benefits for one’s financial health and even save money!
Developing the habit of saving first and then spending
According to billionaire Warren Buffett, if you buy things you don’t need, you’ll soon have to sell things you do. That is why most wealthy people have the habit of saving first and spending later.
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So, whatever your excuse is, stop blaming yourself for your inability to save and get rid of excuses like insufficient income, high expenses, or the desire to live by the Yolo (you only live once) motto. The secret to saving is to develop the habit of saving first and spending later. Take the new year of 2024 as an opportunity to begin this habit. Set aside a portion of your monthly income for savings. To begin, it can be 20%, 30%, 50%, or any other percentage.