I'm Gearing Up for Big Financial Changes in 2024. Here's How

It's fair to say my 2023 was full of upheavals. I started the year with what seemed like some reasonable financial plans. But, you know what they say about the best laid plans. A combination of health issues, unexpected home repairs, and a broken relationship sent everything off kilter.

That's OK. We all have days or months or years where things don't work out. The trick is to learn what lessons we can and then focus on what's next. As I approach 2024, not only do I need to get back on track financially, I also need to pay for the life changes I want to make. Here are the steps I've taken to prepare.

1. I took stock of my finances

My first step in approaching 2024 was to sit down and re-evaluate my budget. I went back through recent bank statements and mapped out all my spending in various categories -- even the impulse spending I'd rather not admit to. I use a spreadsheet, but you can use a budgeting app if you prefer.

It took a couple of hours. When I was done, I had a clear picture of:

• How much I'd earned
• How much I'd spent (and what I spent it on)
• What I had in savings and in my emergency fund
• What I had in my retirement/investment accounts

Key takeaway:

It can be difficult to take an honest look at your personal finances, but the knowledge will give you a solid basis to plan and make changes. I didn't rework my budget when things started to go awry and didn't curb my spending enough as a result. That meant I dipped into my savings and fell behind with my retirement contributions. Don't wait for external milestones like the start of a new year -- treat your budget as a flexible tool that needs regular adjustments.

2. I worked out what my goals will cost

Next, I wrote down each goal and mapped out what it would cost. Whether it is taking a vacation, buying a new car, learning a new skill, or paying down debt, get it all down on paper.

For example, my goals in 2024 include:

• Buying my former partner's half of our home: Without getting bogged down in the details, I will have to borrow money. My budget helped me work out how much I could afford to pay each month, which makes it easier when comparing rates and shopping for the right loan.
• Paying to do a financial planning qualification: This is a fixed cost I've been saving for, but the chaos of my 2023 meant I didn't put aside quite enough. I am reluctant to delay the course. Instead I'll pay for each segment individually rather than one lump sum.
• Replenishing my emergency fund: I want to have an emergency fund with six months' worth of living expenses. I had some big unexpected costs last year, so the sooner I can restock my savings account, the better.
• Getting my retirement savings back on track: I'd love to put extra money into my brokerage account next year to make up for my missed contributions this year. Sadly, that isn't realistic. With all the other costs, I'll aim to make regular contributions in 2024 and try to catch up in 2025.

Key takeaway:

If you set goals without working out how you'll pay for them, it will be very hard to make them happen. Assign dollar amounts and dates for each goal. If you can't see how it will fit into your budget, you may have to delay some of your ambitions or find a different way to fund them.

3. I worked out how I'll fund it all

The goals set out above will cost me about $1,300 in extra spending each month. It is a lot, but it isn't impossible. I plan to cover that with a mix of spending cuts and increases to my income.

I'll cut my spending

Looking at my budget, I can get my spending down by $400 per month, potentially more if I commit to a very frugal year. For example:

• I will reduce my grocery costs by cutting back on meat, using more budget stores, and batch cooking.
• I will halve my take out and dining expenses. This is my biggest area of overspending and a change in habits will generate big savings.
• I've canceled a number of subscriptions and will curb my internet spending.

The thing about spending is that there's only so much you can cut. I'm going to need to find ways to bring in more cash if I want to cover the remaining shortfall.

Consider a side hustle

The common advice at this point is to take a side hustle or work extra hours. I'm a freelancer and there are a few ways I can take on more work. However, there's a limit to how much I can do, especially as I also want to study. I plan to increase my income by $500 a month by working on Saturday mornings.

Passive income

Truly passive income is very hard to come by, no matter what the internet tells you. For example, people talk about writing e-books or creating courses. Both of those involve a lot of work to set up, as well as ongoing effort to market.

What I plan to do instead is to rent out a room in my house. There's still time involved: I'll need to look after the tenants and take on extra cleaning and landlady responsibilities. All the same, it is the most achievable way I can bring in the money I need.

Key takeaway:

Cutting your spending and/or increasing your income can help you finance your goals. Either way, try to be realistic. It's all very well to think you can stay in every night and eat only rice and beans to save money, but that isn't sustainable.

Similarly, if you want to earn more through a side hustle or so-called passive income, think about how much time will be involved. All of us are capable of incredible things, but we're not superheroes and there are only so many hours any of us can work productively each day.

Keep it manageable

I put a lot of my plans on hold in 2023 and am ready for big changes next year. By breaking it down into achievable steps and figuring out how I'll fund each bit, it feels achievable. Even so, I know things probably won't all go according to plan. I've already set a calendar reminder for a monthly check in with my budget. Not only that, but I also plan to sweeten the chore by doing it with ice cream.