You’re likely occupied with a lot right now, such as finishing work projects before the holiday break, buying gifts for your favorite people, and deciding on a New Year’s resolution. Far be it for me to add more to your plate, but have you given any thought to your finances for next year? If you haven’t, you should. Here are five excellent places to put your money in 2024.
1. Debt payoff
If you have high-interest debt (such as that on a credit card), you’re in a bad position these days — but certainly not alone. The Ascent’s research team found that as of the second quarter of 2023, the average American had $6,365 in credit card debt. It’s never a good time to be carrying high-interest debt, but thanks to the higher federal funds rate (hiked to cope with inflation in 2022 and 2023), we’re seeing even higher APRs on credit cards. So the more debt you’ve got, the more expensive it is. While credit card debt may get cheaper in 2024, if the Federal Reserve lowers rates (this will not directly lower credit card APRs, but we could see lower ones as a result), it’s not a guarantee.
It’s best to make paying off your debt a priority in 2024. If you approach it with a plan, you’re likely to find more success. Consider snowballing your debt payoff (start by paying extra toward your smallest balance), as doing so will help motivate you. Another option is a debt consolidation loan, which gives you the perks of a lower interest rate, a set payoff timeline, and just one combined debt bill to pay each month instead of multiple.
2. An emergency fund
One way to give yourself more peace of mind is to save money for unplanned expenses. The typical recommendation for an emergency fund is to save three to six months’ worth of bills, because this amount gives you money to fall back on if you lose your job. It also gives you cash to pay for a home repair or a medical bill that your insurance doesn’t cover in full. If you’re currently lacking emergency savings, hop on it for 2024. The best place to keep your emergency fund is either a high-yield savings account or a money market account. Online savings accounts in particular are paying high APYs right now, thanks to lower bank overhead costs and the aforementioned higher federal funds rate. You’ll get a high APY with one of the best money market accounts, too, as well as easier access to your cash — many of these accounts come with checks or a debit card.
3. A 401(k) or a traditional IRA
If you work for an employer that offers a 401(k) plan, you should take advantage of that in 2024 if you haven’t yet. This is especially true if your employer also matches a portion of your contributions. Let’s say you’re eligible for a 3% match — if you contribute 3% of your salary, and your employer adds another 3%, that’s free money, and definitely worth getting. Every dollar you can save toward retirement now is a dollar that can grow thanks to investment returns and the power of compound interest.
