Take stock now to help you reduce your stress — and stay on track for your goals in 2024.
Many people start the year with a renewed focus on improving their health, deepening their relationships with loved ones, or better managing stress. Our New Year’s resolutions often focus on acts of self-care — especially wellness activities that help prioritize mental health and mindfulness. For 2024, there’s another category to add to your self-care priorities: your finances.
“Financial self-care can help reduce stress related to your money,” says Meena Kotak, senior director of advice at Wells Fargo Wealth & Investment Management. “It can be very empowering to know how your money works for you and how you can use it to help accomplish your goals.”
Here, Kotak shares her thoughts on four key areas of financial self-care: investments, retirement, estate planning strategies, and fraud prevention. But whether you’re hoping to put more away in savings for retirement this year or finally review or update your estate plan, Kotak notes it’s important to keep it all in perspective. “Stay true to what you want to accomplish,” she says.
Investments: Take stock of where your money is
What to keep in mind from 2023: Interest rates have risen to levels not seen in two decades. This led many banks to increase interest rates on savings and checking accounts, issue certificates of deposit (CDs) that are paying higher rates, and even offer cash bonuses to those opening new accounts.
What that could mean in 2024: Interest rate increases may or may not directly impact your investments, but, Kotak says, you may have money spread among many more accounts than usual. Your first act of financial self-care: Understand where your money is.
Goals to set: Kotak suggests creating a personal balance sheet before tax time. “Our clients get year-end statements and tax documents as they’re preparing for income tax filings,” she says. “Those documents might help point out some gold mines where they’ve tucked dollars away.”
Retirement: Make sure you’re balanced
What to keep in mind from 2023: Investment markets can be unpredictable. Kotak says she saw the potential impact of that volatility earlier in the year when she worked with an advisor whose client was reluctant to rebalance their portfolio away from their company’s stock. (Their 401(k) match was in company stock.) Kotak and the advisor modeled the potential negative impact a drop in that one asset could have on the client’s retirement portfolio, and the client agreed to diversify. Bottom line: Being too reliant on any single investment can backfire if that investment suddenly loses value.
What that can mean in 2024: It may be time to evaluate your investments and consider rebalancing — selling some stocks and buying other assets is a way to diversify and potentially reduce your overall risk.
Goals to set: Consider scheduling time with your advisor to review your current investments and make a plan for rebalancing, if needed. “You want to do the best with your dollars for retirement,” Kotak says, “but if you’re emotionally tied to one component of it, you may not be furthering your retirement goals.”
Estate planning and documents: Prepare for upcoming changes
What to keep in mind from 2023: While the federal estate and gift tax threshold will stay about the same for the next two years, it is set to revert to 2017 levels at the end of 2025, barring any additional government intervention.
What that can mean in 2024: The 2026 change could potentially cut the exemption by more than half, from $27.22 million for couples in 2024 to $10 million (adjusted for inflation). Depending on your level of wealth, this could be one of the biggest impacts to plan around in the coming years.
Goals to set: In the first half of 2024, consider setting a time to talk with an estate planning professional to review your estate plan and related documents. Along with making plans for potential impacts to the estate and gift tax thresholds, ask these questions:
- Do I have all the right documents — a will, trust, health care directive, financial powers of attorney, and any others I may need?
- Are my documents current, or do they need to be updated based on recent changes in my life?
- Where am I keeping my documents — and who knows where they are?
Fraud prevention: Add layers of protection
What to keep in mind from 2023: Online fraud continues to grow. The FBI’s Internet Crime Complaint Center received more than 800,000 fraud complaints in 2022, the most recent data available, and the numbers continue to rise. “We’re hearing about more and more people who have been subject to fraud,” says Kotak, who also feels that more people are willing to share their experiences to help others learn of the risk.
What that can mean in 2024: Kotak says you should be cautious about emails or texts from people you don’t know — and doubly cautious about clicking on links in any unexpected communications. “Trust your gut,” she says. “If it’s too good to be true, it probably is.”
Goals to set: Immediately — as in today — turn on multifactor authentication (MFA), also referred to as two-factor authentication (2FA), for any online accounts that offer it including financial, shopping, and social media. MFA/2FA requires you to input additional information — such as a time-sensitive code sent via text message — once you’ve entered your password as a way to help keep out bad actors. Consider using a password management tool for your online accounts, which can help you keep track of passwords and create complex, strong passwords that won’t be easily guessed by others.
One more piece of advice on the subject from Kotak: When getting rid of old documents — which can itself be an act of self-care — make sure you shred them or have them destroyed by a reputable, secure shredding service.
Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Asset allocation and diversification are investment methods used to help manage risk. They do not guarantee investment returns or eliminate risk of loss including in a declining market.