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.