Are you ready to commit to 2024 being the year you dedicate to building your wealth – and securing it? It’s no secret that it takes discipline and time to grow your net worth. In fact, it will be a priority for your entire life. With that being said, there are always things you can be doing to ensure you’re on the path to success.

You can’t build a house without having a blueprint first, right? The same sentiment applies to your finances. It’s going to be difficult to hit milestones and achieve your goals without a holistic financial plan that incorporates all the aspects of wealth management. The essence of this framework is a combination of planning, advice, and investments. Success is not dependent on one, but rather all three working together.

Let’s build your net worth in 2024 with a holistic approach.

First, how important is your net worth?

Net worth refers to your assets minus debt. It’s one of the more common measures of financial health as it’s more stable than simply relying on income. Your net worth reflects assets and debt accumulated over your lifetime (or perhaps passed from generation to generation), while income ebbs and flows alongside your career.

You can have positive, zero, or negative net worth.

• Positive net worth indicates that the value of your assets exceeds your debt and liabilities with some left over. In other words, you have a cushion for financial emergencies.
• Zero net worth, as it may suggest, is when your assets equal your liabilities leaving you with no financial cushion.
• Negative net worth means that your liabilities are greater than your assets.

This is where a financial plan can help. Using specialized tools, you can input all your information to visually see how it all adds up and address areas that need discipline, such as paying off your debts. These financial planning tools can help incorporate investing and saving strategies to give your wealth a boost.

Planning: Where to start building your net worth

As we know, your net worth depends on a myriad of factors. But the beauty of finances is that the methodology to attainment never changes. You spend and save. Success (or failure) is in the hands of the disciplines and strategies you apply to your finances – investment management, tax management, estate planning, and, of course, financial planning. At the end of the day, your financial future is in your hands.

Sure, there are caveats that come in depending on the economic environment, current legislation, and your emotional biases as an individual.

Take the economy, for example. It showed great resilience this year amid the Federal Reserve’s mission to tackle the highest inflation rate since 1981. While the consumer price index, a key metric of inflation, has come down from an astonishing 9.1% in June 2022 to 3.1% in November 2023, it’s still higher than the Fed’s ideal target of 2%. We’ve all seen, felt, and heard this impact. Every day that high inflation continues to linger is a day in which budgets need to be reviewed and adjusted to account for higher bills and spending.

As you review your budget, it’s important to pay yourself first. Saving for the future and retirement today smooths the path for your financial journey. One way to do this is to maximize retirement contributions through your employer. 401(k)s and IRAs are the two common retirement savings vehicles. The 2024 contribution maximums are $24,000 for 401(k)s and $7,000 for IRAs.

Why think about retirement today? Well, it’s all in the power of saving or compounding. Compounding describes how money builds on itself, creating even more money over time, in an exponential manner. The more time you allow for compounding to work its magic, the greater your money will grow.

Finances are emotional. It’s easy to get caught up in the latest trends or become hyper-focused on one goal and make a poor financial decision. Behavioral finance is an emerging field of study that focuses on natural human errors and biases, and how they can impact our behavior. Working with a financial advisor can help reduce these mistakes.

Advice & Investments: Strategies to discuss with your advisor

Financial advisors are your champions of your financial plan and goals. They’re able to be an unbiased, third party who will review the numbers and get to know you and your family to understand your motivations and aspirations. They can also help provide strategies to help you grow your wealth.

Take the Tax Cuts and Jobs Act, for example. Many provisions are sunsetting in 2025. Tax brackets are changing, estate and gift tax exemptions are decreasing, changes are coming to standard deductions and personal exemptions, and alternative minimum tax for high earners is going to impacted. The sunsetting of these provisions has significant tax consequences, putting tax preparation at the top of the list for long-term planners. Work with one who can use their expertise to apply the right strategies to your financial plan.

Set yourself on the right path to achieve your financial goals by marrying a tax strategy with an investment strategy that has an appropriate asset allocation that aligns with your risk tolerance, time horizon, and financial goals.

These are just a taste of the strategies that you can take advantage of with the help of a financial professional. There’s always changing legislation, new financial planning tools, the economic cycle, and evolving markets to keep in mind. That’s why the framework of planning, advice, and investments is becoming increasingly more important to take a holistic approach to achieve your goals effectively and efficiently.

Get started incorporating this framework for your plan, today.

Please consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation. The information in this article is not intended as legal or tax advice.