WHAT SHOULD YOU DO with your money next year? The same things you should have done this year, and the year before, and the year before that.
The rules for a successful life—financially and otherwise—are, I believe, pretty timeless. What rules? Here are 24 of my favorites.
1. Ask why. If you don’t know where you’re going with your finances, you’ll likely end up somewhere you don’t like. What are your money goals for 2024 and beyond? Take a few minutes to sketch out your priorities. Mine include working fewer hours, giving more to charity, helping my children financially, building up my Roth accounts and simplifying my portfolio.
2. Ponder the risks you’re taking. Managing money means managing a slew of risks, including threats like fraud, litigation, hefty unreimbursed medical costs, long-term inflation, short-term investment losses, market underperformance and more. You can’t avoid all financial risk. But you can ponder which risks you’re taking and, if the potential losses seem unbearably large, take steps to limit the fallout.
3. Be skeptical. We live in a treacherous world full of self-interested storytellers. Their stories are often financial, such as dire warnings of an economic Apocalypse, or predictions that this stock or that market will soar. But the stories might also deal with politics, health care or social issues. Whatever the topic, rest assured: The storytellers have an agenda, whether it’s self-promotion, self-enrichment or sowing discord in U.S. society. Listen at your peril.
4. Don’t run with the herd. This is closely related to No. 3. Don’t act on any investment or economic chatter that’s tainted by boasting or predictions. That means ignoring the office investment banter, the online hoopla over particular stocks or market trends, and your neighbor’s blathering about his purported market-beating returns. As I urged in last week’s article, try to lean against the wind.
5. Doubt yourself. Are you tempted to make a big portfolio change, perhaps slashing your allocation to stocks or stashing more than 5% of your money in any one company’s shares? There’s a good chance you’re convinced you know something that’s unknowable. My advice: Discuss your big investment bet with a friend or family member. In all likelihood, as you try to articulate your rationale, you’ll realize it isn’t so rational.
6. Control what you can. Faced with a turbulent financial world, folks often latch onto anything that seems to promise certainty, which is why the stories told by market pundits and cocktail-party investment gurus can be so seductive. But these stories always rest on unreliable short-term predictions. Instead, focus on the things you truly can control: saving and spending, risk, investment costs, your portfolio’s tax bill—and, perhaps most important, your own response to the market’s ups and downs.
7. Be patient. I regularly get emails from readers asking what I think of bonds, or value stocks, or emerging markets, or some other segment of the financial markets. The unspoken anxiety: These investments lately haven’t done well and perhaps it’s time to bail out. We live in a world where we get constant short-term feedback on long-term investments, and that mismatch is a source of endless worry. But these beaten-down sectors are indeed long-term investments—and, in all likelihood, they’ll once again have their day in the sun.
8. Embrace optimism. The tragic and the disturbing dominate the headlines, which may explain why so many are pessimistic about the future. Yet living standards continue to rise, health care improves and technology advances. Want to bet this progress continues? That’s the reason to own stocks.
9. Pause before acting. Whether it’s a portfolio decision, a big purchase or that fiery response to an email you didn’t like, don’t act immediately. Instead, give your brain’s contemplative side a chance to negotiate with your instincts. Often, waiting a day or even a few hours can save us from actions we later regret.
10. Take a time inventory. What do you do each day that’s unnecessary and perhaps even makes you unhappy? As we grow older, our remaining time gets shorter and hence more valuable. Just wasted a day on nonsense? It’s a loss you’ll never recoup.
11. Question your habits. We all fall into patterns of behavior—favoring certain restaurants and vacation spots, eating certain foods, having a drink at 6 p.m., turning on the TV after dinner every evening. Such habits aren’t always good for us, and an unchanging daily routine—while comforting—can cause time to fly by. Want to slow the clock? How about mixing things up a little?
12. Simplify your life. This has been a big push for me in recent years, with a particular focus on simplifying my finances. This will make it easier to manage my affairs as I get older and for my kids to settle my estate. But there’s also an immediate benefit: As I shrink the number of financial accounts I have and the investments I own, I feel a greater sense of control, plus it frees up time to focus on other, more enjoyable activities.
13. Keep striving. Working hard to achieve our goals can be a source of great satisfaction. This is no doubt a trick played on us by our hunter-gatherer genes, which equate hard work with survival. Still, why fight this instinct? We could do good work—and finish each day with a profound sense of satisfaction.
14. Anticipate good times. In March, I’ll take a cruise from New York to Bermuda—one I booked 19 months earlier. The cruise may turn out to be a disappointment. But I figure I’ve already got my money’s worth, because I’ve had all this time to daydream about the vacation, imagining how fun and relaxing it’ll be. My advice: Whether it’s a new car, a home remodeling project, a vacation or some other major expense, plan far ahead, so you can milk as much pleasure as possible out of the anticipation.
15. Give thanks. Our satisfaction with the possessions we own tends to wane over time, thanks to what’s called hedonic adaptation. Want to squeeze more happiness out of your home, car and other purchases? Take time to count your blessings. While you’re at it, think about the special experiences you’ve enjoyed and the wonderful folks in your life. You’ll likely find yourself feeling a whole lot better.
16. Be kind. Consider yourself cynical? Even so, you should be kind to others—because it’ll likely make you feel good, and perhaps even better than it does the recipients of your kindness.
17. Give generously. Like kindness, generosity can boost the happiness of the giver. An added bonus: It could trim your taxes. Consider two strategies. First, if you’re age 70½ or older, make qualified charitable distributions from your IRA. Second, bunch multiple years’ charitable contributions into a single year so you can itemize your deductions, possibly stashing those dollars in a donor-advised fund.
18. Seek new friends. There aren’t many people I want to see every day. But there are plenty of folks I’m happy to spend an occasional hour or evening with. I enjoy hearing the stories and perspective of others, not least because it makes me think differently about my life and my views.
19. Lose the losers. I tend to be overly loyal to longtime acquaintances and overly concerned about others. These might seem like admirable qualities, but—trust me—they aren’t. As I’ve discovered over my adult life, there are folks who are human black holes. They’ll take everything you give—emotionally, financially and otherwise—while offering little in return. Want to improve your life in 2024? Figure out which “friends” are more akin to parasites, and cut them loose.
20. Don’t dwell. We all make mistakes, including big financial mistakes. We all suffer slights, and sometimes far worse. I have no magic strategy for putting such things behind me, but I do know dwelling on the past is a colossal waste of time. Yes, there I go again, mentioning time. It’s the ultimate limited resource, and we should be miserly in how we spend it.
21. Exercise, preferably outside. There’s no conclusive evidence—yet—that exercise or spending time in nature boosts happiness. Still, I find exercising and spending time outside each day are crucial to my well-being, both physically and emotionally. One obvious benefit: lower medical costs.
22. Get at least seven hours. Sleep, alas, has been one of my biggest struggles over the past decade. I’ve come to realize that I sleep better when I eat earlier, eat less, avoid alcohol and go to bed with the day’s concerns put to rest. Over the past year, I’ve done better on all those fronts, and it’s helped. Don’t sleep well? I’m no expert, but I’d encourage you to work on it—because the health and emotional benefits of a good night’s sleep are many.
23. Talk honestly about money. I’m not suggesting you tell the neighbors how much you earn, what you’re worth or your plans for your estate. But you should tell your family. By talking honestly about your finances, you’ll educate family members about money, prompt them to think about their own finances, manage their expectations about future gifts and any inheritance, and potentially prevent squabbling after your death.
24. Use those savings. Yes, there’s happiness to be had from sitting with a fat portfolio. Yes, if you’ve lived a life of frugality, spending can be uncomfortable. Still, for those of us who have been good savers, we need a plan for our nest egg. Happiness might lie in charitable donations, giving to family members, or paying to avoid life’s discomforts and hassles. For now, you might opt to do nothing with your savings. But realize that doing nothing is indeed a decision. Make sure it’s the right one.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X (Twitter) @ClementsMoney and on Facebook, and check out his earlier articles.
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Enjoy Bermuda! It’s a very expensive place to visit so eat most meals onboard. One of the best things is their public transportation. Buses run completely around the island in opposite directions. The tickets are amazingly cheap. Be sure to get up to the St George end of the island and walk over an easy hill and snorkel in the very safe Tobacco Bay. We love Bermuda, especially by cruising.
Thank you. I will need to read this over and over again in 2024.
#15 is especially important to me.
#21: Exercise, preferably outside. “… evidence—yet—that exercise or spending time in nature boosts happiness” see https://www.amazon.com/Successful-Aging-Neuroscientist-Explores-Potential/dp/1524744182 A good bit about the brain and the benefits of things like walking on irregular surfaces/trails (which I do a lot https://outdoorfoo.wordpress.com/).
24 nuggets of great advice!
Maybe another rule to consider is to at least take a quick look at all your accounts, including insurance claims.
The day after Christmas received the quarterly Medicare statement, and noticed there was over $12,000 in fraudulent charges applied out of state against my Medicare number and supplement policy. Spent a couple of hours on the phone with Medicare, and while there is no financial liability on my part,I was told to expect a new Medicare card with a new Medicare number shortly and to start using this card immediately…that was quite a surprise and guess your Medicare card is really like a credit card.
Apparently this was a computer hack from one of the medical providers I’ve been to in the past, it is also annoying that my medical records have incorrect medical records due to this so this needs to be sorted out also. So, consider glancing at everything, not just financial documents.
JC – Thank you for this article. I look forward to your Saturday wisdom and this one was amazing. You are part financial advisor and part sage. Thanks for all you do with the website. Happy New Year to you and your family.
Great article Jonathan….nice to end the year on one of your best!!
Thanks for the wisdom as we close out 2023 and reflect on the year ahead. This newsletter is something to which I (and obviously many others) look forward to each week, so you can be sure you’re well aligned on 13, Jonathan. Your striving and hard work is much appreciated by the community you’ve built here.
21 is a great one too and I vow to get back out on the bike more this year. Parks, trails (and libraries) are luxuries accessible to most. Walking, hiking, biking and reading/learning are all good uses of one’s limited time and worth building into the daily and weekly routines. Though I enjoy the gym, there is something about being outside that can’t be beat.
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The 14th one on anticipation brings to mind a quote courtesy of Winnie the Pooh, “Well,” said Pooh, “what I like best,” and then he had to stop and think. Because although Eating Honey was a very good thing to do, there was a moment just before you began to eat it which was better than when you were, but he didn’t know what it was called.”
― A. A. Milne, Winnie-the-Pooh
Pooh is one one of my favorite philosophers!
Yes, indeed!
Happy New Year, Jonathan, and thanks for the wisdom you impart to us all year long!
Great way to end the year, Jonathan.
When in doubt, I fall back on the 3 military maxims
I have cleaned up #2 and #3 from the military version so many of us know.
Jonathan, thanks for a great year of wisdom, capped by a great year end article. I hope to continue working on many of these items in 2024. Happy New Year.
Be 100% equity in accumulation phase with an emergency fund
I love #8!
I hadn’t thought about how optimistic owning stocks was, but you are right. If one isn’t optimistic about the future, there is no reason to own.
What a great list. I could comment on so many of these, but I’ll pick one. Regarding #23, in my very first HD article, I talked about our new estate plan that we set up early this year. Our daughter knows that she’s the beneficiary of our estate and that we have a new attorney and trustee in charge of it. What she doesn’t know is that we’ve set it up such that if something happens to both of us sooner rather than later, the funds will be released to her incrementally over decades. It won’t be exhausted until she turns 60. She’s 29 now. She’s had some trouble launching as an adult and managing money, and we’re looking way ahead and ensuring she’ll have some money to fall back on in her own retirement. It also protects her in the event of a marriage that ends in divorce. At some point, she might appreciate all that and even acknowledge that we did the right thing. At this moment, though, I think she’d take our plan as a vote of no-confidence and that we were shaming her. So we’re not going to discuss it with her anytime soon. It’s also possible, of course, that we could change the plan if she pulls things together in the future.
I think she might be pleased to be included at all. My brother was the one who had trouble “launching” but Dad kept him in the will, and I know how grateful he was. And he didn’t get it all at once.
What if she reads your comment?
Highly unlikely, and I’m not sure she’d recognize the board name as me, anyway. But if she did, I’d be straight with her.
No. 8 – Embrace Optimism is No. 1 on my list. I consider this the same as “only you are responsible for your own happiness”. Don’t allow others to drag you down.
21 and 22 … Increasing your VO2 max while riding your bike is the single best thing you can do to improve your health Jonathan … And Dr. Matthew Walker’s book on sleep (Why we Sleep) is excellent
As usual, this is a very good article. However, I have a major quibble with the statement that medical care is getting better.
Not all medical care is getting better. For instance, mandatory health insurance (which is not really insurance) via a commercial provider may be good for the stock market, but it is bad for patients who have treatments managed and limited by bureacrats. A shortage of many medications is due to competition in markets; a technology to help patients is being withheld due to money concerns. Another example of business benefitting while patients suffer: https://www.cnn.com/2023/12/26/health/private-equity-hospitals-riskier-health-care/index.html
Am I telling a story with an agenda? Yes. That medical care, which should be getting better due to our knowledge and technological prowess, is threatened by shortsighted financial maneuvering.
In some areas of the economy, perhaps we would be better off with the business not contributing to our portfolio return because it is far better contributing elsewhere in our lives.
Of course mandatory insurance as you call it is insurance, just as is employer health insurance and Medicare for that matter.
So, you would be willing to pay for coverage that has no oversight, no medical necessity review, just a blank check for any and all care? if you say yes, there is no problem because insurance does not deny care, it denies paying for it, so you are free to write a check instead of using someone else’s money.
Even according to physicians, about 25% of care is unnecessary? More care is not always better care.
We seem to be confusing medical science with the cost of health care.
I don’t think anyone would dispute that health care is significantly better. Many diseases are treatable today that would have been a death sentence years ago. We can all be thankful for advances in medical science.
Unfortunately, the cost of health care continues to be a problem with no quick fix as far as I can see. No doubt we’ll be debating this topic for years to come.
In the short term you may be right, but in the long view Jonathan is right. Take pandemics for example. The invention of CRISPER that lead to the rapid development of mRNA vaccines most likely saved hundreds of thousands, if not millions of lives worldwide. These were not available during the pandemic in the early 20th century.
If you are under 65, I suggest that you look into a healthcare sharing plan. Do your own due diligence on whether it’s right for you, but I’d look at Zion Healthshare or Christian Healthcare Ministries. I’ve used the latter for the last 7 years, including reimbursement for a major medical procedure and many other routine care reimbursements.
Sharing plans are just big insurance pools with a religious bent. No matter what, all the bills have to be paid in some way, all the costs covered, premiums paid, etc. many such plans require a statement of good health to join. In the long run they cannot survive without being selective.
Legally they are not even insurance. There can be many hoops to jump through before they pay, with few legal recourses.
All great rules that I try to follow. I would add a 25th rule for a successful life. Read HumbleDollar for the common sense advice and supportive group of people. Thank you for letting me share my stories over the past year. I hope to share more in 2024. Happy New Year!
Important year end checklist. Well said! Happy New Year.
Good advice. I think those of us who write for HD have #23 covered.
As far as #24 goes, it sounds like you have been talking to my wife because yesterday she was having a discussion with our construction company son wondering why we have a new kitchen on Cape Cod and not in NJ.
The discussion started with adding a cabinet in the laundry room and ended measuring the entire kitchen plus talk of a new floor, new, well a new kitchen.
I suppose I can count it as a gift to out children.
Give thanks for that house in Cape Cod, to which you can retreat while the NJ kitchen is out of service. Kitchen renovations are the worst…until finished. Good luck!
Don’t I know it.
I’d pick the kitchen over the car!
Get ready for disruption, my friend…
Thanks Jonathan for an always insightful and meaningful article. I would add another category to your list—Contentment. I had always known the day would come when I had to slow down. I assumed that by many years into retirement I’d be content to do less. I was wrong!
Like the poet, Dylan Thomas, there’s a part of me that wants to “Rage, rage against the dying of the light” but I remind myself to enjoy the thrill of still being alive, and grateful that I’m still vibrant. I consider it important to Build social, physical and mental challenges into my day
but accept that those challenges have become less ambitious.
An almost completely random comment. You mentioned Dylan Thomas, which brings me to one of my favorite things to listen to at this time of year:
https://www.youtube.com/watch?v=Hv4-sgFw3Go
What wonderful (and humorous) snowy memories Dylan Thomas shares of another time and place. I wonder what “butter Welsh” is?
The day after listening to that poetical and funny story for the first time, I read the below story of one of the young women who willed that recording (and the whole business of audiobooks) into existence. Serendipity! https://www.nytimes.com/interactive/2023/12/22/magazine/marianne-mantell-death.html
Enjoyed that beauty recording by the poet Thanks Jonathan
Great article. 20 is my greatest problem. I want to be loved by everyone and I meet a lot of people. But that just isn’t possible. I will dwell a long time on it when I meet that one or two people that for some reason just really dislikes me. Then I will spend so much time dwelling on them and the situation that it sucks a lot of joy out of life. I really need to work on that.
#20 for me too. I have never really had much anxiety about the future, but dwelling on the past – it is a bad thing, a real bad thing. So much so that I have come up with a truism: rumination will lead to my ruination.
So, there’s my NY resolution !
Thanks for the great article.
Ken..we all desire respect and approval from friends and acquaintances. What gets us in trouble is the desire to please the whole world.
don’t waste your precious time trying to please others. Focus on your own plans hopes and dreams. You will experience contentment from being truly yourself.