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Interest rates are high and wages haven’t kept pace with inflation. Keep reading to learn how you can cope in 2024.
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I can hardly believe we’re already in 2024 — it feels like a science fiction year. It’s not likely that we’ll be able to buy flying cars or jetpacks this year, but we will be uniquely positioned to make major improvements to our personal finances.
I spent the last few years using the following strategies and managed to completely turn my finances around — now, in 2024, it’s your turn. Here’s what to focus on this year.
Earn interest on your savings
There has never been a better time to have money saved, thanks to a combination of a higher federal funds rate and banking technology. To combat the highest inflation in 40 years, the Federal Reserve raised interest rates 11 times between 2022 and 2023, and while the federal funds rate doesn’t directly inform consumer interest rates, they are linked. Banks have raised rates on deposit accounts, and you can find APYs that would’ve been unheard of not long ago. But they won’t last (when the Fed lowers rates, expect banks to follow suit).
If you’ve got money in the bank and aren’t earning at least 4% APY on it, focus on finding a new home for that cash now. You’ll be joining the 31% of Americans surveyed by The Ascent about savings — that’s a pretty low number of us who are taking advantage of higher APYs. Opening a new savings account with an online bank (they’re offering the best rates, thanks to having no overhead costs to maintain physical branches) is pretty darn easy, and worth it. I earned over $1,000 on the cash I had in my high-yield savings account in 2023. You might really like being with an online bank — they offer great mobile apps and fun features to make saving easier.
And don’t neglect the less-discussed types of interest-earning accounts if they might work for your finances! A certificate of deposit (CD) could be a fabulous choice if you’re comfortable locking up your money for a period in exchange for a locked-in APY that won’t fall during your term. And if you need easier access to your money (say, by checks or a debit card), a money market account could be perfect for you.
Pay down debt
That higher federal funds rate has a downside for folks who have variable-interest debt, like that on a credit card or a home equity line of credit (HELOC). Financial institutions have made it more expensive to borrow money from them, and if you’ve got debt already, the rate on it may have climbed recently. As such, it’s a great time to get out from under it, if you can.
This isn’t where I tell you to pay off debt by giving up your lattes and perhaps your will to live. But I will tell you that it’s a great time to increase your pay. You could do this by asking for a raise at work (more about work below) or taking on a side hustle. I originally started freelancing in 2022 as a means to pay off debt, and to my utter shock, I loved it and became a full-time freelancer a year ago.
But a side gig for you doesn’t have to be an all-consuming thing. You might drive for a ride-hailing service, or consider doing takeout or grocery delivery — you can do these jobs on your own schedule, as much or as little as you want. Money earned won’t already be committed to your bills, so you can roll it right toward debt payoff (less taxes, that is). Watching your debt balance go down feels amazing and you’ll free up more of your income to save, invest, or spend on what you enjoy.
Embrace your work options
Finally, I recommend really digging into all your options for work in 2024. Despite all the employer saber rattling (“back to the office or else!”) since 2021, remote work isn’t going the way of the dodo. American workers like flexibility, and many of us have vowed that we won’t work for an employer that doesn’t offer the opportunity to work remotely at least some of the time. Remote work saves you money on gas and commuting, your wardrobe, and perhaps also food costs. Brown-bagging it when you schlep to an office every day may be cheap, but being trapped in a fluorescent-lit cubicle day in and day out can make you yearn for lunch outside the office.
So consider how your employment situation is working for you this year. If you feel underpaid, dread going to work, or just feel stuck, maybe this is the year you change jobs — or even careers. Changing jobs is likely the most effective way to see appreciable wage growth, too — especially if your wages haven’t grown with inflation. You might also want to consider freelancing — when I became a full-time freelancer last year, it led to the kind of financial and personal freedom I’ve never experienced before.
I especially recommend evaluating your work options if you’re a woman. We’re already at a financial disadvantage thanks to the gender pay gap and all sorts of socioeconomic factors, and no one will advocate for us — we have to do it ourselves.
2024 already — kinda wild, right? Focus on the above strategies to position yourself for financial success in this year’s economic landscape.
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