3 Realistic Financial Goals for the New Year

Ready to make a financial New Year's resolution? Lots of people are -- The Ascent's survey on financial goals for 2024 found that two-thirds of respondents intend to set one. While it's tempting to go big, if you want the best chance of meeting your goal, you might want to temper your expectations. Here are three realistic financial goals that'll change your life for the better.

1. Save a small emergency fund

The most common recommendation for an emergency fund is to save three to six months' worth of cash in a savings account. But if you are starting from square one and have zero money saved, I may as well tell you to save $1 million. I lived without emergency savings for years, and I took on debt, repeatedly, to cope with the unplanned expenses life throws at all of us. It wasn't fun.

Instead of shooting for the moon, why not set a more realistic savings goal for your first emergency fund? Even $1,000 at your disposal can help you avoid (or lessen) the debt you need to take on if you've got an emergency expense. Let's say you're in a minor fender bender in your car, and your auto insurance deductible is $500. If you've got $1,000 sitting in the bank, you can cover that expense and get your car repaired -- without debt. Having any amount of money saved and ready for an emergency can help your peace of mind in 2024.

If your budget is too tight as it is, consider ways to free up a little more cash to save. Shop around for a new car insurer, or perhaps switch internet service providers to one that's cheaper. You might also take on a casual side hustle for a few hours a week -- I have a friend who paid off a significant amount of debt by driving for ride-hailing and food delivery services a few nights a week. You could save what you make (less taxes) and turn that into an emergency fund.

2. Improve your credit score

I added 100 points to my credit score in less than a year, but any amount of improvement to yours can make a difference in your finances. Imagine being able to more easily borrow money the next time you need to -- or even just to qualify for one of the best travel credit cards. Building a stronger credit score is a very worthwhile and realistic goal for 2024.

How do you do it? Start by making a renewed commitment to paying your creditors on time. Not only will you avoid costly late fees, but since payment history is such a huge part of the puzzle (it accounts for 35% of your FICO® Score -- the biggest piece of the pie), making on-time payments will have a positive impact on your credit. You can improve it further by paying down some existing debt, if possible -- this'll improve your credit utilization ratio (30% of that FICO® Score is amounts owed).

Finally, get a copy of your credit reports from each of the three consumer credit bureaus. These are free every week from AnnualCreditReport.com. Check them for errors -- if you find any, you can dispute them with the credit bureau in question. If errors are removed from your credit report, you'll see a better credit score.

3. Get better at managing your bills

Managing your personal finances can be a giant pain, to put it bluntly. A lot of us would rather not actually dig into money management, and instead practice avoidance. If you don't look at your check account balance, you can pretend you're not broke. But I promise you, this technique isn't wise. Instead of putting your head in the sand, why not resolve to build good habits around paying your bills and checking up on your finances?

I recommend making paying the bills a routine. Every week, I sit down to pay whatever is due that week, and I cross the bills off my paper calendar. In the process, I also "balance my checkbook" by keeping track of how much is in my checking account, both before and after bills are paid. This tells me how much I should have in that account, and makes it less likely that I will accidentally overdraft it.

If you are now cringing at the prospect of digging into bills the way I do, there's still a way for you to get better at managing them. You can arrange to have your bills paid automatically out of your bank account, and never worry about missing a due date ever again. It's still a good idea to check on your account and make sure the bills are actually being paid, but this technique can save you time and worry.

Don't assume that setting a financial New Year's resolution must mean aiming for the stars. Real change takes time, and taking little steps in the right direction can do you a world of good. Consider these goals if you want the best chance of making a real change in the new year.