After two years of rising inflation, bank closures and uncertain markets, the economy may be showing signs of stabilizing. But the problem is still not resolved. During this time, the economy has been affected, and in turn, your money has been affected as well.
To help you stay on track with your finances and money goals in the new year, here are some smart money moves you can make right now to get through 2024. However, keep in mind that there is no magic way to become financially stable, and it is rarely possible. All it takes is a snap of your fingers. It requires a lot of effort and a little ingenuity on your part.
Here are just four things (among many) you can do today to secure your finances tomorrow.
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- Build or rebuild an emergency fund
- Maximize your retirement benefits
- Eliminate high interest debt
- invest wisely
Build or rebuild an emergency fund
According to Bankrate's 2023 report, only 19% of Americans increased their emergency savings in 2023. That's despite the fact that 60% of all Americans are behind on their emergency savings, primarily due to rising prices, inflation, interest rates, and household budgets.
This is unfortunate because it means that many households may not have money to fall back on in case of an emergency and may instead rely on high-interest credit cards to get by.
If you haven't built an emergency fund yet, or are planning to rebuild a fund you completely wiped out, today is a good day to start. Planning ahead will help you weather the storms that you will inevitably face in life. By starting slowly and increasing your overtime accruals, you'll have money available when you need it most.
Maximize your retirement benefits
If your employer offers a tax-advantaged retirement account, such as a 401(k) or IRA, as part of your employment contract, sign up and contribute a percentage of your paycheck to your retirement account. Your idle time on the golf course may be years away, but it's not too late to ensure a secure future.
Consider increasing your contributions to maximize tax savings and compound interest potential. Or, if you received a year-end bonus, put some of it toward a retirement or taxable brokerage account. And if you don't take full advantage of your employer match, you're essentially wasting your free money.
Eliminate high interest debt
According to CNBC Select, you could end up paying more than $160,000 in interest alone over your lifetime. This number alone should be reason enough to make a plan to pay off any high-interest debt you've accumulated.
Many experts agree that it's best to first pay attention to large unsecured debts, such as high-interest loans and credit cards. Paying off overdue debts should also be a concern. That's because you'll incur late fees, which can damage your credit and make it harder to get credit later.
invest wisely
Depending on your risk tolerance and financial goals, you have the potential to put your money to good use and build wealth with smart investments. It's also possible that your money will outpace inflation and increase in value.
Diversifying your investments across different asset classes can also help reduce risk. Please consider consulting a financial advisor for personalized investment advice. However, avoid making impulsive investment decisions based on short-term market fluctuations or unreliable sources.
Instead, take a long-term view, learn how the market works, and make careful and prudent choices. Additionally, focus on these five investment strategies before making any quick decisions that could negatively impact your portfolio.