With the New Year comes resolutions—and finances are no exception. Wells Fargo Senior Director of Advice Emily Irwin joins Yahoo Finance Live to provide insight on how to win financially in 2024.

Irwin advises consumers to “understand what your cashflow is and make a budget,” to gain insight on spending practices. Irwin suggests that “dry January” should not only apply to alcohol, suggesting that unnecessary spending should be cut out and only necessities, such as bills, rent, healthcare, be the focus.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: It's a new year, which often means resolutions. And today we're talking about a fresh start for your finances. Joining us now, Wells Fargo senior director of advice, Emily Irwin. Emily, thanks for being here. So as we look at the New year, as we turn the page, what's your top tip for people in terms of making financial resolutions?

EMILY IRWIN: Thanks for having me, and happy new year. So we're going into the new year, understand what your cash flow is and make a budget. That is the most important thing for everyone to do this time of the year. It's especially important because now we have all the data from last year that we can look back at and use to our advantage to be able to think about what seasonally type of spending behaviors we have.

JOSH LIPTON: And, Emily, you also say folks should consider a dry January when it comes to their personal finances. What did you mean by that, Emily?

EMILY IRWIN: Definitely. So so many of us think about our physical and mental health at this time of the year, make a resolution to put your financial health in that same bucket. When you think about dry January, that really means take a step back and only spend on necessities. It's going to be maybe a little bit difficult but a good exercise to go through. Things like gas, rent, mortgage payments, anything related to health care, yes, spend those dollars. Anything that's discretionary, though, take a little pause for the next 30 days and see if you even really miss those items.

JULIE HYMAN: What is the biggest mistake that people make in general-- I mean, I know that's a big question. And people can make all kinds of mistakes depending on their finances. But what's the sort of lowest-hanging fruit, if you will, that people can correct?

EMILY IRWIN: I think most people think that lots of their spending is one off. And therefore, they're not prepared for it. A perfect example of this is actually a holiday spending, which we are experiencing and which consumers are going to be receiving the credit card bills for, if not now, in the next few weeks.

What people don't understand is they think, oh, that's a one time of the year thing. But what they really mean is every year I know I'm going to spend, for example, $1,300 a year in the holiday spending. I can actually set aside $25 a month and fund that. And we have so many examples, whether it's health insurance premiums, auto premiums, holiday spending, or even that one vacation you take every single year, that's not a one-off, that's built into your budget.

JOSH LIPTON: You also say, Emily, that to pay your future self by saving for retirement. For those viewers who are listening right now, Emily, what are the smart ways to do that?

EMILY IRWIN: Well, definitely. If you have a employer available plan available to you for retirement, such as a 401(k) be sure to check are you automatically enrolled. If not and you have the wherewithal and financial ability to do so, enroll in that plan. And certainly try to get up to that employer match. That is free money. No one's ever turned back a paycheck. Let's not turn back future retirement dollars as well.

Secondly, you want to make sure if you're age 50 or older that you're taking advantage if possible of the additional funds that you can set aside in either a 401(k) or an IRA. Congratulations, you don't even need to be 50. You just need to be turning 50 this year or over that age as well.

JULIE HYMAN: Emily, we talked about your title as being head of advice. And I am so curious about how people take advice and whether they take advice, right? I think probably for many of your tips, people turn to you perhaps when they're already in dire financial straits. So how do you get people to be more receptive more early before it gets to that point?

EMILY IRWIN: Yeah. It-- that's a really astute point. And the one thing I'll say is to the extent you can do two things. One, think about incremental changes that are truly you have the ability to implement and don't seem like the world is on top of your shoulders kind of taking out that stress. That's number one.

And number two, really thinking about how can you analyze the data to make it clear to someone that they have options. And that path a may take you six months to pay off your bills, but here's what you need to do it. Path b, you might take 12 months to pay off your bills, and here's the cost associated with it. But here are the behavioral changes you may or may not need to make in order to reach that goal.

Being able to put numbers in front of someone and give them options, I think, is really, really important. So this is where getting like a year-end summary is critical, maybe taking a holistic view of all of your finances, you know, laying out all your credit card statements all of your savings, putting it in an Excel spreadsheet, and really understanding the cash inflows and outflows and saying, where can I make micro behavioral changes that will really affect a target payment date moving from, say, December of this year to June of this year? That's a big deal.

JOSH LIPTON: Emily, thank you so much for joining us today. Some smart tips and tricks there for viewers to consider.

EMILY IRWIN: Thanks.