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A lot of people are starting to make their New Year’s resolutions. And some of yours may be financial in nature.
Now, some will argue that setting financial goals puts undue pressure on people. But you can think about it in a more positive light — setting goals gives you something concrete to work toward. And it gives you potential wins to celebrate. With that in mind, here are three financial resolutions that you may want to commit to for 2024.
1. Building an emergency fund
Recent data from SecureSave finds that 63% of workers today don’t have enough cash reserves to cover an unplanned $500 expense. If you’re in that boat, then perhaps your first and foremost resolution for the new year should be to build your own emergency fund.
How do you do that? Well, one of the most effective ways to build your savings account balance is to enhance your income. For many people, that’s an easier thing to do than cutting back on spending.
You, of course, could select the method that’s easier for you. But sometimes, when you pledge to cut your spending, extra expenses just creep up on you. If you commit to a side hustle, you can use that added income to build some cash reserves so you’re protected against unplanned bills in the future.
2. Paying off costly credit cards
If you owe money on credit cards, you’re in good company. U.S. credit card balances reached a whopping $995 billion as of the third quarter of this year, according to data from TransUnion.
But you’re probably aware that the longer you carry that debt, the more money you’re apt to lose to interest. So it pays to make paying off credit cards a major financial goal for 2024. And the way to go about that is similar to building that emergency fund — you’ll probably need to either work more or spend less. Or, do a combination of both.
That said, one tactic to help you pay off credit card debt is to do a balance transfer. This could mean moving your debt over to a new card with a lower interest rate, or a 0% rate to start out with. Just pay attention to the fees and other costs you might incur when going this route to make certain it’s worth it.
3. Contributing to a retirement account
If you have no plans to retire any time within the next few decades, then you might think retirement savings isn’t worth focusing on in 2024. After all, why fixate on that when you could instead work toward a more near-term goal? But the sooner you begin saving and investing for retirement, the more opportunity you have to build up a nice nest egg.
The stock market’s average annual return, as measured by the S&P 500 index, has been 10% over the past 50 years. So if you put $5,000 into an IRA or other retirement account in 2024 and earn that same return for 40 years, that $5,000 will grow into over $226,000 — really.
Whether you’re someone who normally makes New Year’s resolutions or not, these are three important financial tasks worth tackling in 2024. If you push yourself to accomplish these goals, you’ll really have something awesome to celebrate by the time 2025 rolls around.
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