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6 big money mistakes to fix before 2024
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Thanksgiving is now behind us as the holiday season moves with breakneck speed toward the end of the year. The new year is just around the corner, so now is an excellent time to review your finances and make some strategic fixes for 2024.
As you plan ahead, it’s critical to ensure you’re not making some big money mistakes that plague many Americans. For example, you might be paying too much interest on your debt while not reaping enough interest on your savings account.
Let’s review some of the most common money mistakes to fix now so they don’t drag on your finances in 2024.
Start exploring your top savings options here to prepare for the new year.
1. Leaving your money in a regular savings account
If you have money in your savings account, give yourself a hand. Roughly 20% of Americans didn’t save money in 2021, according to the MagnifyMoney Savings Index. But is your money working for you? It probably isn’t if your money is parked in a traditional savings account.
The average savings rate on savings accounts is a paltry 0.46%, according to November 2023 data from the Federal Deposit Insurance Corporation (FDIC). However, you can earn substantially higher rates by transferring your money into a high-yield savings account (HYSA). These are savings accounts typically offered through credit unions and online banks with rates that currently range from around 4.30% to 5.15%. That means you could earn approximately nine to 11 times more interest and grow your money faster by switching to a high-yield savings account.
Don’t pass on the opportunity to earn more interest on your savings.
2. Missing the opportunity to earn big interest returns
HYSAs aren’t your only option for earning higher interest returns. Certificates of deposit (CDs) and money market accounts (MMAs) could also boost your interest earnings and help you achieve specific goals.
CDs enable you to earn higher rates than regular savings accounts in exchange for leaving your money in your account for a specific period, typically from three months to five years. One strategy you can employ is to align your savings goal with a CD term that matches a goal timeline. For example, if you plan on buying a home in three years, select a three-year CD to grow your down payment at a higher yield, and you can access your money when the fund matures in three years. Remember, however, you could incur an early withdrawal penalty if you pull out money before the term’s maturity date. According to the FDIC, the average CD yields range from 5.59% for a three-month CD to 4.82% for a 60-month CD.
Money market accounts also offer higher rates compared to most savings or interest-bearing checking accounts. As of November 2023, the average interest rate for money market accounts is 0.63%, but you may find accounts online earning between 4% and 5%. Money market accounts usually come with checking account features like debit cards and check-writing capabilities. You may prefer this type of account if you want that type of flexibility and higher yields and don’t want to lock your money into a CD account.
3. Follow a budget
If you don’t already have a budget, creating one for 2024 could be a wise financial move. You should have a plan for your money, and you can update it regularly. Aim to spend two hours a week reviewing your budget and looking for ways to optimize it for your situation.
As Chris Longworth, a financial advisor and educator at Financial Education Group, points out, a budget can allow you to spend what you need and save what you must.
“Thinking ahead and planning carefully using a well-built and well-defined budget makes this task of managing your money much easier to accomplish,” says Longworth. “The worst thing one can do is spend their money without a plan. When there is no definition of a budget, money will disappear nearly three times faster than when you have a defined budget to follow.”
4. Not maintaining an emergency savings account
In September 2023, the personal savings rate among American households was 3.4%, according to the U.S. Bureau of Economic Analysis. With many households living paycheck to paycheck, an unexpected expense or loss of income could become a financial catastrophe if you’re not prepared. Along those lines, a 2022 Federal Reserve survey found that 37% of adults either couldn’t cover a $400 unexpected expense or would need to borrow or sell something to do so.
Experts recommend saving at least three to six months’ worth of living expenses in an emergency savings fund. That may seem like a daunting goal, but the important thing is to get started and save whatever you can at first. Aim to increase your savings amount over time until you reach your goal. Then, you can begin saving for your next goal, like a down payment on a house or adding extra money to your retirement fund.
5. Paying the minimums on your credit cards
The average credit card interest rate is 22.77%, but you can avoid interest charges altogether if you pay your balance in full each month. If you’re making the minimum payment, your interest charges could be offsetting any gains you’re making from your investments and taking away money you could be dedicating to your savings and other investments.
One way to pay down high-interest credit cards and reduce your interest charges is through a debt consolidation loan. This type of personal loan can streamline your finances by combining your credit accounts into one loan with one payment and a fixed interest rate. Personal loans tend to offer lower interest rates than credit cards, with loan rates currently averaging 12.17%.
Another option to tackle high-interest credit card debt is to move your debt to a balance transfer credit card. These cards typically offer a 0% introductory period lasting up to 21 months, which could give you enough time to zero out your balance while avoiding interest charges.
6. Not investing in your retirement
If you’re not saving for retirement, consider doing so as soon as possible — your future self will thank you. Take steps to get your money working for you so you can stop working and enjoy a comfortable retirement when the time comes. The earlier you start contributing to your 401k or IRA, the better, as it allows more time for compounding interest to significantly grow your savings.
“If you’re financially able to, maxing out your 401k is always a good idea,” says Jena Gruenebaum, the director of client advocacy at Marygold & Co. “Not only are you building for the future, but you will lower your tax bill for the current year, so it’s a win-win. Even if you can’t afford to contribute the max, which is now just over $22,000, do everything you can to take full advantage of any employer match. It’s free money and adds to your overall compensation for the year.”
The bottom line
The holiday season can be hectic, but it’s essential to make time to review your finances before the new year. Identify any money mistakes you may be making and take steps to address them. With a few strategic moves, you could position yourself for a financially safer and more prosperous 2024.
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California Gov. Gavin Newsom vetoed a bill Saturday that would have required new cars to beep at drivers if they exceed the speed limit in an effort to reduce traffic deaths.
California would have become the first to require such systems for all new cars, trucks and buses sold in the state starting in 2030. The bill would have mandated that vehicles beep at drivers when they exceed the speed limit by at least 10 mph.
The European Union has passed similar legislation to encourage drivers to slow down. California’s proposal would have provided exceptions for emergency vehicles, motorcycles and motorized scooters.
In explaining his veto, Newsom said federal law already dictates vehicle safety standards and adding California-specific requirements would create a patchwork of regulations.
The National Highway Traffic Safety “is also actively evaluating intelligent speed assistance systems, and imposing state-level mandates at this time risks disrupting these ongoing federal assessments,” the Democratic governor said.
Opponents, including automotive groups and the state Chamber of Commerce, said such regulations should be decided by the federal government, which earlier this year established new requirements for automatic emergency braking to curb traffic deaths. Republican lawmakers also said the proposal could make cars more expensive and distract drivers.
The legislation would have likely impacted all new car sales in the U.S., since the California market is so large that car manufacturers would likely just make all of their vehicles comply.
California often throws that weight around to influence national and even international policy. The state has set its own emission standards for cars for decades, rules that more than a dozen other states have also adopted. And when California announced it would eventually ban the sale of new gas-powered cars, major automakers soon followed with their own announcement to phase out fossil-fuel vehicles.
Democratic state Sen. Scott Wiener, who sponsored the bill, called the veto disappointing and a setback for street safety.
“California should have led on this crisis as Wisconsin did in passing the first seatbelt mandate in 1961,” Wiener said in a statement. “Instead, this veto resigns Californians to a completely unnecessary risk of fatality.”
The speeding alert technology, known as intelligent speed assistance, uses GPS to compare a vehicle’s pace with a dataset of posted limits. If the car is at least 10 mph over, the system emits a single, brief, visual and audio alert.
The proposal would have required the state to maintain a list of posted speed limits, and it’s likely that those would not include local roads or recent changes in speed limits, resulting in conflicts.
The technology has been used in the U.S. and Europe for years. Starting in July, the European Union will require all new cars to have the technology, although drivers would be able to turn it off. At least 18 manufacturers including Ford, BMW, Mercedes-Benz and Nissan, have already offered some form of speed limiters on some models sold in America, according to the National Transportation Safety Board.
The National Highway and Traffic Safety Administration estimates that 10% of all car crashes reported to police in 2021 were related to speeding. This was especially a problem in California, where 35% of traffic fatalities were speeding-related — the second highest in the country, according to a legislative analysis of the proposal.
Last year the NTSB recommended federal regulators require all new cars to alert drivers when they speed. Their recommendation came after a crash in January 2022, when a man with a history of speeding violations ran a red light at more than 100 mph and struck a minivan, killing himself and eight other people.
