After two years of rising inflation, bank closures and an uncertain market, the economy may be showing some signs of stability. But we’re not off the hook just yet. During this time, the economy was impacted, and, in turn, so was your money.
To stay on top of your finances and money goals in the new year, here are smart money moves you can make right now to crush 2024. But, keep in mind that there is no magic formula for becoming financially stable, and it’s rare you can just snap your fingers and make it happen. It will take hard work and a little ingenuity on your part.
Here are just four (out of many) things you can do today to secure your finances tomorrow.
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- Build or rebuild an emergency fund
- Maximize retirement contributions
- Get rid of high-interest debt
- Invest wisely
Build or rebuild an emergency fund
According to a 2023 report from Bankrate, Only 19% of Americans increased their emergency savings in 2023. That's despite 60% of all Americans feeling behind on their emergency savings, primarily due to rising prices, inflation, interest rates and high household expenses.
That’s unfortunate, as it means many households have no money to fall back on in the case of an emergency and instead may rely on high-interest credit cards to pull them through.
If you haven’t already built an emergency fund or you are planning to rebuild a fund you’ve wiped clean, today is a good day to start. Preplanning can help you weather the storms we are all sure to face in life. Start slow and increase the amount you add overtime, so when you need the money, it's available.
Maximize retirement contributions
If your employer offers tax-advantaged retirement accounts like 401(k)s and IRAs, as a part of your employment agreement, sign up and contribute a percentage of your paycheck to set aside for retirement. Although idle hours on the golf course may be years away, it's never too late to ensure a secure future.
Consider increasing your contributions to maximize potential tax savings and compound interest. Or, if you receive a year-end bonus, put a portion towards your retirement or taxable brokerage accounts. And, if you’re not taking advantage of full employer matching, you’re essentially throwing away free money.
Get rid of high-interest debt
According to CNBC Select, you could end up paying $160,000-plus in interest alone over your lifetime. That figure alone should be reason enough to make a plan to pay off any high-interest debt you’ve accumulated.
Many experts agree it’s best to first pay attention to high-cost debt without collateral, such as high-interest loans and credit cards. Paying off overdue debt should also be a concern because it can trigger late fees and hurt your credit, making it more difficult to qualify for credit later on.
Invest wisely
Depending on your risk tolerance and financial goals, wise investing can put your money to work and potentially build wealth. It can also allow your money to outpace inflation and increase in value.
Diversifying your investments across different asset classes can also help to mitigate risk. Consider consulting with a financial advisor for personalized investment advice. But resist making impulsive investment decisions based on short-term market fluctuations or an untrustworthy source.
Instead, keep a long-term perspective and learn how the market works so your choices are well-thought-out and deliberate. Plus, focus on these 5 investment strategies before making any quick decisions that may adversely impact your portfolio.
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