5 simple (but important) financial changes to make in 2024
As we step into the new year, it's the perfect time to reassess your financial habits and make positive changes. And, that's true for just about anyone, whether you're an expert at managing your finances or are a novice looking to shore up the basics as part of your 2024 resolutions.
After all, the last year has been tough on many people's finances, thanks to high consumer goods prices due to inflation — as well as the high-rate environment meant to temper it. So, in most cases, it could benefit most people to take a good, hard look at their finances to find out where they can shore up any loose ends in the new year.
And, there are easy steps you can take to enhance your financial well-being, whether you're looking to save more money, invest wisely or simply be more financially responsible in 2024. To help you get started, here are a few financial changes you may want to consider making in the new year.
Start the new year on the right foot with a high-earning CD.
5 simple (but important) financial changes to make in 2024
If you want to start the year off on the right financial footing, consider making these five simple changes:
Explore the benefits of a CD
With today's high interest rates, opening a certificate of deposit (CD) can be a smart move. CDs offer a fixed interest rate for a specified term, ranging from a few months to several years — and right now, it's easy to find CDs offering rates of 5.5% or more, especially when it comes to short-term CDs. In fact, some CDs offer rates as high as 7% currently.
And, due to their low risk and guaranteed returns, CDs can be an attractive option for those looking to preserve capital while earning competitive interest. Research different banks and financial institutions to find the best CD rates that suit your financial goals.
Explore the best CD rates available to you online here.
Maximize savings with a high-yield savings account
It can also benefit you to consider moving your savings to a high-yield savings account to take advantage of higher interest rates. Unlike traditional savings accounts, high-yield accounts offer substantially higher interest rates, allowing your money to grow more quickly.
For example, right now, regular savings accounts offer an average rate of 0.46%, while high-yield savings accounts currently have rates as high as 5% or more on your money. That's a significant difference compared to the rate you can get with a traditional savings account.
To find the best account option and the best rate for you, be sure to research both brick-and-mortar banks as well as online banks and financial institutions. Online accounts often have fewer fees and restrictions compared to their brick-and-mortar counterparts, which can result in higher APYs being offered on those accounts.
Create a budget and stick to it
The cornerstone of any sound financial plan is a well-thought-out budget. Start by tracking your income and expenses to understand where your money is going. Categorize your spending, identify areas where you can cut back and allocate funds to savings and debt repayment.
And, you can take advantage of how easy technology has made it to do this. For example, there are numerous apps and tools available to assist you in creating and maintaining a budget, making the process simpler and more effective.
Build an emergency fund
Life is unpredictable, and having a financial safety net is crucial. As you start the new year, aim to save three to six months' worth of living expenses in an easily accessible account. This type of fund will provide peace of mind and act as a buffer in case of unexpected expenses or emergencies, allowing you to navigate financial challenges without derailing your long-term goals. And, you can keep that money in a high-yield savings account to accrue interest until you need to access it.
Eliminate high-interest debt
If you have outstanding high-interest debt, such as credit card balances, focus on paying it down aggressively in the new year. High-interest debt can quickly accumulate and become a significant financial burden — and right now, credit card rates, which are typically variable, are a lot higher than they were just a couple of years ago.
To eliminate this type of debt, try to allocate any extra funds toward paying it down, starting with the debts that carry the highest interest rates. This not only reduces your overall debt but also saves you money on interest payments.
The bottom line
Implementing these five simple financial changes in 2024 can set you on a path to a more secure and prosperous financial future. By creating a budget, building an emergency fund, eliminating high-interest debt, exploring the benefits of a certificate of deposit and maximizing savings through a high-yield account, you'll be better positioned to achieve your financial goals and weather any economic uncertainties that may come your way. But remember, the key is consistency — these small, positive financial habits can lead to significant long-term benefits.
