Improving your finances is a common New Year's goal, but it can be difficult to know where to start, what you have time for, and what will make a big impact. However, if you want to take advantage of the fresh start effect that comes with a new year, the best approach is to focus on the simpler but effective aspects of your financial life.
Here are five simple steps you can take to start improving your finances in 2024.
1. Track your spending and get a baseline
For some of us, there is some disconnect between our ideal spending habits and how we actually spend money on a daily basis. That's why it's important to track your spending and, most importantly, review your habits to understand your starting point.
caveat: The best cashback card we've ever seen has an introductory APR of 0% for 15 months. Learn more about.
It may sound time-consuming, but if you want to use a budgeting app that links to your various accounts, it can actually do it passively for you. Or, if you want a little more effort (but more financial privacy), you can download and calculate your statement instead. This option also has the benefit of double-checking your account for any discrepancies or fraudulent charges.
2. Create a budget that actually works
The idea of creating a budget can feel restrictive and boring, so it's understandable that you'll want to stick to established methods like the 50/30/20 budget. This means half of your money should go towards necessities, 30% towards wants, and 20% towards savings and debt. This is a useful starting point that provides clear rules, but a 50/30/20 budget won't work for everyone, so you may need to adjust it to fit your lifestyle and needs. . For a more flexible option, you may want to choose something like zero-based budgeting. This basically means giving all your money to do certain jobs based on your needs.
more: The best credit cards we choose
Using your spending habits as a guide can also help you see what your values and priorities really are. From there, you'll be ready to choose what you need to change, what you don't want to compromise on, and whether there's anything you'd rather do without purchasing.
The optimal budget is ultimately determined based on your circumstances and should be adjusted as your circumstances change.
3. Roll over your old 401(k) to an IRA
If you've ever had a 401(k) but haven't rolled it over to an IRA yet, this is a sign that it's time. why? First, it may give you access to investment and educational features that were not available to you at the time. That way, you won't forget about it even after you retire. Additionally, newer IRA brokerages may offer better features, such as access to educational materials to help you invest.
The exact steps will depend on the company holding your old 401(k) and where you plan to keep your new IRA. For example, you may need to call your brokerage directly to notify them of the rollover and have them send you a check. The check will be sent to your new brokerage with your new account number. It might be easier if you're sticking with your current brokerage, but you should always make sure you're getting the best account and features.
4. Set up automatic payments and savings transfers
Assuming your payment schedule is somewhat predictable, setting up automatic payments on your various accounts is a quick and easy way to avoid late fees. This will also protect your credit score from damage caused by late payments. This is important if you plan on taking out a loan in the future or leveraging your credit in other ways.
Since you already have a workable budget in place and you also need to know how much money you can transfer to your savings account each month, it makes sense to automate that as well. Ideally, you'll want to schedule these savings transfers to be sent immediately after you receive your paycheck. Then you won't want to touch that money because you won't have access to it. Also note that you have the option to skip the transfer to avoid an overdraft.
5. Switch to a high-yield checking account
If you're still banking with a company that doesn't offer interest on funds in your checking account, you're missing out. In fact, interest rates on high-yield checking accounts are very high, and you may be able to find interest rates of up to 5% APY right now. For example, if your balance is $5,000, you can earn about $250 a year at 5% interest and you don't have to do anything. Of course, the interest rates on these accounts will fluctuate, as will your actual balances, so your earnings will fluctuate as well.
Managing your personal finances can be difficult, but with these simple and effective steps, you'll be ready to tackle bigger goals and improve your overall financial health in 2024.
Warning: The highest cash back card currently confirmed has an introductory APR of 0% through 2025
This credit card isn't just great; It's so good that our experts use it personally. This card features a 0% initial APR for 15 months, a cashback rate of up to 5%, and somehow no annual fee.
Click here to read the full review for free and apply in just 2 minutes.
Read free reviews
