Start The Year With 3 Keys To Financial Success

If you’re aiming for a financially successful start to the year, the key lies in revisiting the past to gain insights before setting your sights on growth. Here, we outline three steps to kick off 2024 with a clear understanding of your current financial landscape, helping you end the year right where you would like to be.

1. Know Your Budget

The best way to get a good understanding of your budget is to review your recent spending. Understanding your budget can help you identify areas to cut back or redirect funds. “It’s hard to identify opportunities for investing, savings, and other financial goals if you don’t actually know how you’re spending your money,” said Jerrod Ferguson, Vice President of Vance Wealth in Santa Clarita. “Knowledge really is power when it comes to your money and will have direct influence on what you may do next with your money.”

There are a few easy ways to get a clear picture of your 2023 spending. Most major credit card companies will provide annual spending reports that give you a detailed analysis of where your money went last year. Jerrod also suggests using a budget tracking software or app like like Credit Karma (formally Mint.com) or Monarch. After inputting your budget limits for each category, you can track your accounts and spending in one place. It will even send you alerts if you’re in danger of overspending in a specific category. This can help you adjust your spending before it goes off course, rather than beating yourself up after missing a target. 

2. Set Personal & Financial Goals 

Once you know where your money has been going, you can set realistic and achievable goals for 2024. At Vance Wealth, we let your future dreams guide the course of our financial plans, so we suggest setting personal and financial goals at the start of each year. When deciding your personal and financial goals for 2024, choose a few to focus on for maximum impact. Whether you want to increase the savings in your emergency fund or pay off debt, focus on the few goals that will make the most significant difference. 

3. Understand your 2023 Tax Picture

The markets are coming off a volatile (and negative) 2022 but a strong 2023 where the markets had a great finish to the year. We saw some funds pay out capital gain distributions again last year which were very minimal in 2022 because of the negative markets and tax loss harvesting opportunities. We are recommending that if you are worried about being underpaid for 2023 taxes, you communicate any dividends, interest, and capital gain figures to your tax professional to see if any action is needed prior to January 16th. You want to make sure you are “penalty proof” for your 2023 taxes.  

To penalty proof yourself, you must meet of one these two requirements for individuals:

1. Pay 90% of the tax you owe in the current year; or 
2. Pay 100% of the tax you owed last year.

If your adjusted gross income last year was greater than $150,000 (over $75,000 for married filing separately) you must pay the lower of:

1. 90% of tax for current year; or
2. 110% tax shown on last year’s return. 

It is important to avoid any underpayment penalties where possible. You should be working with your tax professional to gain a better understanding of any tax liability for 2022 to help you plan properly and avoid surprises. 

If you want personalized recommendations for your budget, goals, and investments, the Wealth Advisors at Vance Wealth can provide a custom roadmap to achieving more for you and your family.

Since 2003, Vance Wealth has served as a premier financial planning practice passionately committed to helping families and businesses succeed at every step of their financial journey. Serving Southern California, the practice delivers innovative and comprehensive wealth management strategies precisely customized to each client’s goals and needs.

To schedule a consultation click here or to learn more, call 661.775.0950, email info@vancewealth.com or visit www.VanceWealth.com.

Disclosures: Vance Wealth, Inc. (“Vance Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Vance Wealth and its representatives are properly licensed or exempt from licensure. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.