With the new year underway, everyone is hoping for 2024 to be a more peaceful, prosperous year for their personal finances. But getting more money in your bank account, retirement savings, or brokerage account doesn’t just happen. You need to plan ahead and make careful decisions.
Here are a few simple money moves you can make right now to (ideally) get richer in 2024.
1. Increase your 401(k) contributions
If you have a job that offers a 401(k) plan or other employer-sponsored retirement savings plan, 2024 is a great time to bump up your contributions. Are you already getting your full employer match for your 401(k)? If not, make sure you’re putting in at least that much money so you don’t miss out on “free” retirement cash from your employer. Not getting your 401(k) match is like not taking your paid vacation days — you deserve those employee benefits, and you should take them.
If you’re already getting the full employer match, consider upping your contributions by a percentage point or two. For example, if you are a single person with a salary of $75,000, and you could put an extra 2% of your salary into your 401(k), that would give you an extra $1,500 of retirement savings by the end of 2024. And assuming you’re in the 22% tax bracket for 2024, reducing your taxable income by $1,500 would help you save about $330 of taxes.
For these reasons, boosting your 401(k) is an easy win-win solution to help you get richer: You get more money saved for your future retirement, and you can get a break on 2024 taxes.
2. Get a high-yield savings account
Do you have an emergency savings fund? If so, where is it? (Don’t say “under my mattress…”) You should ideally have three to six months’ worth of living expenses in an emergency fund, and you should keep these emergency savings in a bank savings account with FDIC insurance, so your cash is protected (up to $250,000) in case of bank failure.
But in the past few years of rising interest rates, many people might not have noticed a powerful banking trend: Lots of banks have started to pay higher interest rates on savings accounts. That means you don’t have to settle for near-zero APYs from your bank anymore; you can go get a high-yield savings account and earn 5% APY (or higher).
Let’s say that you have $15,000 of emergency savings in cash, and you put it in one of the best high-yield savings accounts with a 5% APY. In one year, you’ll earn $750 of interest on your savings. Don’t pass up that free money. Stop letting your cash languish in a zero-interest bank account. Put your cash savings into a high-yield savings or money market account that actually pays you some interest.
3. Check your investment portfolio
The start of a new year is also a good occasion to take a fresh look at your investment portfolio. Check your brokerage account balance, log into your 401(k), and look at any other retirement savings accounts. Think about a few questions:
- How is your money allocated — stocks, bonds, exchange traded funds (ETFs)?
- How are your investments performing? Did you get a strong return on investment (ROI) in the past year across your portfolio, or did some of your investments suffer a drawdown?
- Do you have the right asset allocation — an appropriate mix of investments based on your age, risk tolerance, and time horizon?
- Are you well diversified, or do you need to rebalance your portfolio?
- Are you on track to reach your investment goals?
Many robo-advisors and brokerage platforms offer free tools and calculators to estimate how much money you’ll have in retirement, based on your investment performance. These tools can help you visualize whether or not you are on track for your savings goals. You can also use our free Foolish calculators to see how your retirement savings could grow, understand if you have enough money to retire, and more. If you have more complex questions or want to re-evaluate your investment asset mix, you might want to talk with a professional financial advisor.
Bottom line: With just a few simple money moves, you can save thousands of extra dollars for retirement, gain hundreds of dollars in interest on your savings, and build a foundation for a more comfortable retirement. Every new year is a chance to start fresh and do some financial housekeeping. What if 2024 could be the best year ever for your money? Start today!
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