New year, new you: Are you improving your finances in the upcoming year?
According to a recent survey from Fidelity Investments, 66% of those consumers surveyed are setting financial resolutions for a better 2024. Among Millennials and Gen-Zers, the number is even higher at 75%.
Whether you're aiming to save more, invest wisely, or reduce debt, setting financial resolutions can pave the way for better financial habits. Below are five resolutions and tools that can help you improve your finances in 2024.
1. Upgrade Your Savings Account
If you still have your savings stored at a traditional bank, consider moving a large portion of your funds to a high-yield savings account. Our top picks are Goldman Sachs Marcus and the Capital One Performance 360 accounts, but it's easy to explore rates at other providers.
Rates have soared in recent years, with some banks offering APYs of 5% or more. Given that most traditional banks only offer 0.46% on average, keeping the bulk of your cash in their accounts is a missed opportunity to leverage higher rates of compounding interest.
Already have a high-yield account? Consider a certificate of deposit, or CD, for funds you won’t need in the short-term. With the Federal Reserve poised to lower rates next year, CDs are a great way to lock in today’s high interest rates.
“The top-yielding savings accounts, money market accounts, and CDs are earning well more than the current rate of inflation, and this is likely to persist in 2024,” says Bankrate Chief Financial Analyst Greg McBride. “Interest rates will probably come down a bit, but so too will inflation. The yields you lock in today will look even better as inflation ticks lower during the year.”
One of the fundamental steps towards financial well-being is creating a budget. This resolution involves taking a close look at your income, expenses, and financial goals. Begin by categorizing your spending, distinguishing between necessities and discretionary expenses. Use online budgeting tools or apps to help you track your money more efficiently. Having a realistic budget not only helps you manage your day-to-day expenses but also allows for strategic planning toward your financial objectives.
2. Tackle High-Interest Debt
High-interest debt, such as credit card balances and student loans, can be a significant obstacle to saving and investing for the long-term. Start by identifying the debts with the highest interest rates and focus on paying them off first. Consider consolidating debts or negotiating with creditors for lower interest rates. Make it a priority to reduce and eliminate high-interest debt in the new year.
3. Diversify Your Portfolio
Investing is a one of the best ways to grow your wealth. Whether you're a seasoned investor or a novice, make a resolution to review and optimize your investment strategy in the coming year.
Diversify your portfolio, consider long-term investment options, and take advantage of tax-advantaged accounts, such as IRAs and 401(k)s. If you're unsure where to start, consult with a financial advisor to create a personalized investment plan aligned with your financial goals.
4. Lower Your Insurance Costs
Insurance costs have skyrocketed across the board. Homeowners insurance costs increased by nearly 11% between 2021 and 2022, according to S&P Global. While the cost of auto insurance soared 17.8% from July 2022 to July 2023, according the U.S. government's consumer price index.
Getting quotes from new insurers can lower costs, as can reducing your coverage, selecting a higher deductible or leveraging discounts. Insurance providers may offer discounts if you bundle multiple policies, such as auto and home insurance.
5. Improve Your Financial Literacy
Financial literacy is key to making informed decisions about your money. Commit to enhancing your financial knowledge in the new year. Read books, attend workshops, and follow reputable financial resources to stay updated on economic trends and investment opportunities. The more you understand about personal finance, the better equipped you'll be to make sound financial decisions that align with your goals.
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