How to get your finances in order for 2024
Start the new year with a fresh look at your savings and budgets
New Year's Day means New Year's resolutions – and, with disposable incomes still tight, money will be high on many people's agendas.
January is a good time to reassess your finances and boost the health of your savings, especially with interest rates at their highest for years.
Saving more
The high interest rates mixed with high inflation make it a good idea to save as our "buying power" is being "diluted by rising prices", said the BBC.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
When thinking about savings, creating targets that are "achievable and specific, not general" means people are "more likely to achieve their goals", said UK Savings Week.
Once these goals are in place, sticking to them can be difficult, but in order to stay focused, savers can use a "visual reminder" such as a dream house or car to help them remember why they are saving in the first place.
Picking a suitable savings account is half the battle, but "this is where it can get complicated", the BBC stated, particularly as there are a wide range available.
To get started, an easy-access account may be best, as while they "tend not to have the best interest rates", they allow withdrawals at any time, the broadcaster added.
Creating a better budget
While a budget can "feel constricting", keeping an eye on your spending is a "helpful tool" in reducing unnecessary costs, said CNBC.
Writing down your fixed expenses or downloading a budgeting app is likely to be the best first course of action, the website added, helping people to see what they have left over for "flexible expenses".
If creating a budget for the first time feels "intimidating", you might want to follow a strategy, said The Wall Street Journal's Kevin J. Ryan.
One such method is the 50/30/20 rule, a "tried and true" formula that allows 50% of post-tax income for needs, 30% for wants and 20% for savings. The "simplicity" of this approach is good for "creating flexibility", said Ryan.
The 70/20/10 method uses a similar approach, or the pay yourself first method, to direct "a percentage of your income towards a savings account" before expenses, he added.
Improving credit score
A good credit score is "essential" to be able to access the best borrowing rates, said The Times Money Mentor, but this involves hard work as it "doesn't happen overnight".
New Year is a good time to check your score, as a bad one can impact everything from a phone contract to securing a mortgage.
Some tricks to improve your score are quicker than others, but their impact might vary. For example, signing up to the electoral register means it is "easier for lenders to verify your information", helping speed up the process of applying for credit, the news website added.
But most important in improving your credit score is the need to "instil some good financial habits" until the number is "near-perfect", The Times Money Mentor continued.
One way to do so is by using a credit card "little and often", the news website said, as this avoids someone having no credit at all, something which "gives lenders a blank slate" and is not considered favourably.
Reducing debt
Getting rid of debt can be "overwhelming", said NerdWallet, and this is amplified by the fact there are several options to take. The best way is likely to depend on "how much you owe compared with your income".
There are two main do-it-yourself methods worth considering for those determined to clear debts in 2024.
Paying off the smallest debt first is an approach known as the debt snowball. It's the "best and fastest" option, said Ramsey Solutions' Jade Warshaw, as getting rid of debt is "all about momentum".
Or there is the debt avalanche. It means using money to pay off the bill with the highest interest rate. This method "will save you the most in interest payments", said Investopedia.
Experts suggest clearing debts before starting to save. This is because debts "usually cost more than savings earn", said Money Saving Expert founder Martin Lewis.
Planning for the future
It is never too soon to be planning ahead for your pension. Tools such as the MoneyHelper pension calculator can help with estimating finances needed in later life.
The state pension is available for those who have made enough National Insurance contributions throughout their lifetime, typically 30 years, but a private pension will help to top this up.
People are "bad at talking about death", said This is Money, but "planning what will happen to your money and assets after you are gone is also a New Year goal for some".
You can do it the cheaper "DIY way" or use a solicitor, said the site, but it is worth acting soon before your New Year's resolutions fade.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Rebekah Evans joined The Week as newsletter editor in 2023 and has written on subjects ranging from Ukraine and Afghanistan to fast fashion and "brotox". She started her career at Reach plc, where she cut her teeth on news, before pivoting into personal finance at the height of the pandemic and cost-of-living crisis. Social affairs is another of her passions, and she has interviewed people from across the world and from all walks of life. Rebekah completed an NCTJ with the Press Association and has written for publications including The Guardian, The Week magazine, the Press Association and local newspapers.
-
How much can you save shopping secondhand?
The Explainer Many Americans are buying pre-owned items to counteract the effects of inflation
By Becca Stanek, The Week US Published
-
Downtown St. Louis is in a real estate 'doom loop'
Under the Radar The city is ripe with abandoned buildings and vacant lots, with its real estate market in dire straits
By Justin Klawans, The Week US Published
-
TV to watch in May, from 'Bridgerton' to 'Black Twitter: A People's History'
The Week Recommends The return of an HBO staple, a new series from the filmmaker behind 'Tiger King,' and more
By Anya Jaremko-Greenwold, The Week US Published
-
How much can you save shopping secondhand?
The Explainer Many Americans are buying pre-owned items to counteract the effects of inflation
By Becca Stanek, The Week US Published
-
What is a home energy audit and when is it worth getting one?
The Explainer This evaluation of your home's efficiency can pinpoint where exactly it's wasting energy
By Becca Stanek, The Week US Published
-
Should you wait to claim Social Security benefits?
The Explainer The longer you wait to collect, the larger your monthly checks may be
By Becca Stanek, The Week US Published
-
Is it actually economical to fly basic economy?
The Explainer Airlines have placed so many restrictions on basic economy, you may wonder if it's even worth the savings anymore
By Becca Stanek, The Week US Published
-
Who actually needs life insurance?
The Explainer If you have kids or are worried about passing on debt, the added security may be worth it
By Becca Stanek, The Week US Published
-
Job scams are increasingly common. Here's what to look out for.
The Explainer You should never pay for an application or give out your personal info before being hired
By Becca Stanek, The Week US Published
-
How (and why) to have the inheritance talk with family sooner than later
The Explainer The hard conversations aren't going to get any easier if you wait
By Becca Stanek, The Week US Published
-
How to find cheaper car insurance as premiums accelerate
The Explainer Car insurance costs are rising but there are ways to put the brakes on price rises
By Marc Shoffman, The Week UK Published