Money Management

Want 2024 to be a strong year financially? Then read on to see which missteps you’ll want to avoid. 

Whether 2023 was a great year for you financially or not, you may be eager to rock 2024. But part of doing that is knowing what financial mistakes to avoid. Here are three you should absolutely try to steer clear of.

1. Not replenishing your emergency fund after taking withdrawals

You may, at one point or another in 2024, need to tap your emergency fund to pay for unplanned bills. That’s not something you should stress about, because that’s what that money is there for. But one thing you should aim to do is replace funds after taking them out of your savings. That way, you can ensure you’re prepared for your next emergency.

Now, this doesn’t mean that if you take a $3,000 emergency fund withdrawal for a home repair, you’re going to be able to put all of that money back within a couple of weeks or even months. But do your best.

Cut a little spending one month to put back $150. Take on a side gig during a month when your main job isn’t so busy to earn an extra $500 for your savings. The more cash reserves you have, the more protection you gain.

2. Allowing credit card debt to linger

Americans have a collective $995 billion in credit card debt, reports TransUnion. Because this type of debt is so common, you may be inclined to chalk yours up to circumstances — and resign yourself to racking up credit card interest as needed until you happen to have the money to pay off your balance.

That’s not the best approach, though. If you let your credit card debt linger for too long, you could end up spending way more money on interest than expected.

Case in point: Let’s say you owe $1,000 on a credit card charging 24% interest. You might say to yourself, “Eh, it’s not such a large balance. I’ll pay it back when I can.” But if it takes you four years to knock out that seemingly small balance, you’ll end up losing about $565 to interest. That’s money that could go into your savings instead.

3. Not contributing enough to your 401(k) to claim your employer match

If your company offers a 401(k) plan for retirement savings, you may not feel all that motivated to contribute to it. After all, you have your share of near-term bills to pay, and it’s hard to part with money for a milestone that’s so far off.

But if your company’s 401(k) comes with a match, try to contribute enough money to that plan to claim the match in full. The reason? It’s free money. And how many opportunities in life do you get to snag free money?

Also, realize that the money your employer puts into your 401(k) can be invested so that it grows into a larger sum over time. In fact, the stock market has averaged a 10% annual return over the past 50 years based on the S&P 500’s performance.

Let’s say your employer gives you $3,000 for putting $3,000 from your own paychecks into your 401(k). If your 401(k) manages to generate that same 10% return, then in 40 years, that $3,000 will be worth almost $136,000. So while you might need to temporarily slash some personal spending or even take on a second gig to free up that money to contribute to your 401(k), it’s really worth doing.

You may have high hopes for 2024, and that’s a good thing. But if you want to close out the year in a more financially sound place, do your best to steer clear of these unfortunate blunders.

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It may not be so easy to buy a home in the new year. But read on to see why it may be more doable than expected. 

Several people I know have spent the better part of 2023 looking at houses in an attempt to find a property they can make an offer on. And those same people have, unfortunately, all hit similar snags.

Right now, a lack of housing inventory is driving real estate prices up. It’s a simple matter of there not being enough supply to go around. And it’s hard to pay a premium for a home at a time when mortgage rates are still above 7%.

If you didn’t manage to buy a home in 2023, then you may be gearing up to search in 2024. Or, you may be looking at buying a home for the first time in the new year.

Either way, know this: While current housing market conditions aren’t exactly wonderful for buyers, you’re not necessarily doomed if you decide to move forward with an offer in 2024.

Mortgage rates could come down

It’s not just mortgage lenders who are charging higher interest rates these days. Lenders across the board are imposing higher costs on borrowers on the heels of the Federal Reserve’s interest rate hikes.

The Fed has been raising interest rates since early 2022 to combat soaring inflation. And that’s driven the cost of borrowing up in a very big way.

But if inflation continues to cool, the Fed may cut rates in 2024. If that happens, we could see mortgages get a bit less expensive. And if rates fall to, say, the lower 6% range, that could help some buyers on the affordability front — even if home prices remain high.

Plus, remember that even if you get stuck with a higher mortgage rate in 2024, there’s always the option to refinance to a lower rate down the line. The key, however, is to make sure you can afford your home based on your loan’s initial interest rate.

If that rate allows you to keep your housing costs, including your mortgage payments, property taxes, and homeowners insurance, to 30% of your income or less, then you can feel reasonably confident that you’ve chosen an affordable property.

You may not pay as much as expected

It’s true that home prices are generally up right now. But you may be able to pay less thanks to savvy negotiation.

One thing you can do is work with your real estate agent to hire an aggressive home inspector — someone with a reputation for really being nit-picky. Any issues that inspector uncovers with a home you’re looking to buy can be used as a negotiating tool to get your seller to come down on price.

Also, don’t be afraid to be nit-picky yourself. If the backyard fence has seen better days, speak up. You never know when a homeowner may be more desperate to sell than they’re letting on.

If you’re willing to purchase a starter home, you may find that you’re able to spend a lot less money. That could mean giving up some square footage, or having to make a lot of repairs early on. But if you’re handy and have the bandwidth to do some work, you might end up with a lower purchase price on your home than expected.

All told, 2024 may not be the easiest year to buy a home. But it doesn’t mean you’re doomed to overpay and struggle if you decide to move forward with a home purchase, either. The key is to know how much house you can afford and be willing to potentially compromise a bit to get yourself into a home you can build equity in.

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Evaluating your current job could be a first step toward a career change. Take a look at a few questions to ask yourself as the year wraps up. 

A few years ago, I came across a career idea that suggested asking yourself every year if you want to keep doing the job you’re doing. At its core, it’s a personal finance question. That’s because most of us do the job we do because, among other reasons, it pads our checking accounts.

But asking myself if I want to stay in the job I’m in (I’m a freelance writer) is helpful each year because it does two things for me:

It reminds me that I have a choice in how I spend my time.It encourages me to think of new ways to improve my work.

I’ve been a freelance writer for 11 years, so the past few years of asking myself if I want to stay in the job have been a strong “yes.” But the second part of it — how I can improve my current job — is just as important as the initial question.

Even if you’re in a job you like, there are always ways to improve it. Or, if you’re in a position you don’t particularly like but can’t leave right now, there may be a few moves you can make to make your situation better.

Focus on what you can control

Many years ago, I was searching for a new position and was eager to find something new. During a long period of job hunting, I told myself that as long as I was applying to jobs, I was always two weeks away from a new one.

I didn’t have any job offers at the time, and sometimes I didn’t even have interviews. But this little mental trick kept me motivated. I reminded myself that applying to jobs leads to interviews, and interviews lead to job offers, and job offers will eventually result in putting in my two weeks’ notice.

It was a way to remind myself that my sole responsibility in finding a new job was to simply apply for them. Complaining about my job would keep everything the same; the only remedy was sending out resumes.

Make small changes to the work you enjoy

Since I like what I do, I usually start the new year trying to figure out how I can improve what I do. The answer usually varies from year to year, but it helps set the tone for the upcoming work year.

For example, last year, I wanted to have more clients. I spent some time researching gig work platforms to do that, spoke with friends about opportunities, and was able to boost my client portfolio. This year, I’m paring things back a bit and exploring potential ways to earn passive income.

Neither of the above changes were massive shifts in what I do; they were just adjustments. You may be able to do the same at your job. Perhaps there’s a new project you’d love to work on, but you still need to mention it to your boss. Or there’s a client lead you want to pursue, but you haven’t put together the right pitch yet.

Whatever it is, carve out a little time to think about it before the year starts. List a few things you want to accomplish or improve about your current job. It might go a long way toward helping you enjoy your current position even more. And if you feel stuck, learning a new skill might improve your situation or even help you find a new job.

Changing jobs or switching careers is challenging and will likely take time to accomplish. However, asking yourself questions about your current situation could go a long way toward putting you on a better path.

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Sometimes, putting off a big purchase means losing out on an opportunity. Read on to learn more. 

When my husband and I bought our house, we intentionally chose a home at the low end of our price range so we’d have smaller mortgage payments. We figured that this way, we’d have the ability to save for other goals.

One of those goals has, for me, always been buying a vacation home. There’s a specific area in Upstate New York where I’ve dreamed of owning a small cottage or cabin. And in 2019, I was tempted to take the plunge.

At that time, it would’ve cost about $250,000 to $300,000 to purchase a property I would’ve been happy with. I had enough cash in my savings account for a down payment and a little extra to cover things like repairs and improvements.

But I got nervous and decided to put off that purchase for a year so I could save some more. That decision, however, may have rendered my goal of owning a home up there unattainable.

The housing market exploded

We all know what happened in 2020, so there’s no need to rehash the horror that was the pandemic, social distancing, remote school, and record-high unemployment. But another big thing that happened in 2020 was that mortgage lenders started slashing interest rates to entice borrowers to sign loans at a time when the U.S. economy was in shambles.

Because of this, buyer demand soared. And home prices quickly followed suit. Suddenly, there I was a year later, looking at prices in the $450,000 to $500,000 range when just a year prior, they’d been way lower.

Now, a big reason home prices blew up in that area in particular is that it’s very remote. And in an age of social distancing, that was a huge draw.

I didn’t panic, because I assumed that mortgage rates wouldn’t stay low forever, and that home prices would start to come down once the market cooled off. Only that never happened. And to this day, I’m looking at paying $450,000 to $500,000 for a home that, had I moved forward with in 2019, would’ve cost $250,000 to $300,000.

A big reason those extremely elevated prices have been sustainable is that the area in question has always had pretty limited inventory. Granted, U.S. inventory happens to be low on a whole right now. As of late October, there was only a 3.6-month supply of available homes nationwide, according to the National Association of Realtors. It commonly takes a six-month supply of homes to even out the housing market and meet buyer demand.

But up where I want to buy, inventory is now practically non-existent. So when a home does become available, the seller can pretty much charge what they want. But since those elevated home prices seem like a permanent thing, buying my vacation home has pretty much become a lost cause.

Frankly, I can’t comfortably afford to buy at today’s levels. And even if I could, I just don’t think I can bring myself to pay almost double for a home knowing what I would’ve paid just a few years ago.

I learned my lesson, though I didn’t necessarily make a big mistake

One of the things I’ve learned from this experience is that sometimes, when an opportunity to meet a lifelong goal arises, you take it. At the same time, I don’t exactly think it was irresponsible of me to err on the side of padding my savings before buying a second home. And I certainly could not predict back in 2019 that the following year, a pandemic would strike, I’d be running elementary school classrooms out of my basement, and the housing market in my favorite vacation spot would be permanently altered.

It’s also, to be fair, a bit premature to say that home prices in the area will never come back down to earth. But based on discussions I’ve had with real estate agents up there, it’s looking like that may be the case.

You may be reading this thinking, “Boo hoo, so you can’t buy your second home.” I completely recognize that many people can’t even afford a first home. Heck, many people can’t even afford the rent on a tiny studio apartment, so I realize I’m in a privileged position to be in a situation where I’m bemoaning my inability to buy a vacation home.

But to be fair to me, nobody gave me the money for a down payment on a second home. I spent many years working 60-plus hours a week to boost my earnings and savings. This was a goal of mine that I earned that’s become unattainable, and I have the right to be disappointed.

You, similarly, may be disappointed that you’ve been unable to buy a home in the wake of the red-hot housing market that arrived during the latter part of 2020 and never fully cooled off. Thankfully, unlike my would-be vacation home area, housing inventory should eventually pick up on a national level. Once that happens, you may find that home prices start to come down and that it’s easier to find an affordable place to buy.

Of course, inventory might pick up in some areas sooner than others. Your best bet is to partner up with a local real estate agent who can keep you in the loop. That way, you’ll know when it’s a good time to make a move.

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I signed up for a gig platform, picked up some extra freelancing projects, and boosted my earnings in 2023. Read on to find out how you can get started. 

At the beginning of 2023, I added more freelancing work into my regular work routine. I’ve been a full-time freelancer for over a decade, but I wanted to add a few additional clients through a gig work platform to improve my personal finances.

I landed several repeat clients within several months and had a few one-time assignments. The result was about $5,000 in earnings for the year. It’s not a life-changing amount of money, but it was certainly worth the effort.

I earned a little less than the average side hustle

I didn’t have a plan for how much I wanted to make and it turns out my earnings were below the average annual side hustle earnings of $5,700. In hindsight, I probably could have earned more if I had devoted additional time and effort to adding new clients.

Instead, I wanted something easily manageable and didn’t take too much of my free time. But the extra money still helped me pay down some bills.

As inflation has soared over the past few years, more Americans are turning to gig work to bring in additional income. An estimated 61% of Americans live paycheck to paycheck, and credit card debt has reached a record-high $1 trillion.

Picking up some side projects is a good way to help cover rising expenses, and the number of Americans with a side hustle is likely to continue growing. Some estimates show that 50% of employed Americans have a side hustle to supplement their income.

Come up with a plan for gig work in 2024

If you’re looking to earn additional income in 2024, here are a few suggestions for coming up with a side hustle strategy:

Figure out what you want: You may only want to make a little additional money, or your goal might be to replace a significant portion of your current income. Your goal will determine how you approach the side hustle. Come up with a plan for how much time you want to spend on it each week and how much you expect to earn.Pick a gig platform: There are many great gig work platforms, each with strengths in specific industries. Find the right platform for you, or multiple platforms, that match up with your skills.Learn new skills: I’m currently exploring this option because I want to learn something new, but it’s also a great way to boost your earnings. A Gallup poll found that people who learn an additional skill earn up to $8,000 more annually than those who don’t.

I don’t plan on ramping up my side hustle in 2024, but it was an excellent way to add in some extra income over the past year. If I did it over again, I would have offered additional services to boost my earning potential.

I also would have taken my own advice and devised a real strategy for building my side hustle. Just keep in mind that it can take time to start earning money. It took several months of work before I landed repeat clients.

Be patient with your side hustle and give it time to start earning money. You might be pleasantly surprised with the results, even if you earn less than the average.

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A paycheck-to-paycheck existence can be extremely stressful. Read on for ways to break that cycle. 

It’s unsettling having to wait until your next paycheck arrives to cover a bill. Unfortunately, it’s something a lot of people are experiencing.

An August CNBC survey found that 61% of Americans are living paycheck to paycheck. That’s up from 58% in March.

If you’re tired of living paycheck to paycheck, you should know that you’re not necessarily doomed to that fate. You can take a few key steps to break that cycle and get to a better place financially.

1. Build up an emergency fund

When you live paycheck to paycheck, you have no cash reserves to fall back on for sudden bills. So to bust out of that cycle, you’ll need an emergency fund.

Ideally, you should aim for enough money in your savings account to cover three months of essential living expenses — things like rent, car payments, and food. That gives you a cushion in case you lose your job and can’t find work for a bit of time.

But let’s also be realistic. If you’re living paycheck to paycheck with no savings right now, you’re not going to snap your fingers and amass three months’ worth of bill money anytime soon.

So for now, keep that goal in the back of your mind, not the forefront. And instead, focus on a savings goal that’s more attainable.

Maybe that’s $300. Maybe it’s $500. One thing you should realize is that having any amount of savings is better than having none, so don’t get down on yourself because you feel you’re not setting the bar very high. You’re better off aiming for a realistic goal so you aren’t discouraged from meeting it.

As for where your savings will come from, that may have to be a combination of cutting expenses and working a second job for a while. If you truly don’t have any bills you can slash, then you may need to make even more of an effort to drum up money with a side gig. But once you hit whatever initial savings goal you set for yourself, you may be surprised at what it does for your financial outlook.

2. Follow a budget

A lot of people feel that budgeting is boring. And it’s easy to see why it may not appeal to you. But if you’ve been living paycheck to paycheck for quite some time, it means that a budget might really help you manage your bills and make the most of your earnings so you can build savings and buy yourself some breathing room. Plus, it’ll show you where your money is going, which might help you free up some of it by eliminating an unnecessary expense or two.

If you don’t want to sit at a laptop working on budgeting spreadsheets day in, day out, find a budgeting app that works for you. Many of the apps out there are not only user-friendly, but just as importantly, free.

3. Find one bigger expense to adjust

Cutting back on every single expense of yours may not be a reasonable way to live. But if you’ve been living paycheck to paycheck, one final thing you may want to consider is making an adjustment to one larger expense of yours.

It may not be feasible to move to a less expensive apartment, and you may not want to deal with the hassle of moving. But if you get a roommate, you can lower your rent that way.

Another option? Give up a car if you can. That might make life less convenient for a period of time, but it could also free up loads of money that you can use to build up savings.

Of course, this option works best if you live somewhere with access to buses and trains that run regularly. But even if you live in a suburban area, if you live alone and work from home, you may find that ditching your car is cheaper even when you account for the cost of a few Uber or Lyft rides per week to do things like shop for food and go to doctors.

It’s not fun to be so incredibly reliant on every upcoming paycheck to cover your bills. If that’s the situation you’ve landed in, these moves could be your ticket to living more comfortably in the new year.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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