“Money is only a tool. It will take you wherever you want, but it won’t replace you as the driver.” ~ Ayn Rand
When it comes to managing your money in precarious times, you have to ask yourself this question: What can I control? And then act on those things — and not worry about the rest.
People often ask me, if I have to do one thing in this economy, what is that one thing? I wish it were that simple, but my answer is usually Be Aware! Be aware that your actions have consequences (good and bad) and that you aren’t the only one in the boat. Stay aware and seek good counsel (e.g., advisor, coach, CPA, attorney, etc.).
Here are 7 things to know about your money in 2024:
FOCUS. You can control your budget, your spending, your credit cards, your money-related decisions, and your job performance. However, you can’t control the federal government debt or deficit or your neighbor’s financial decisions.
What can I do about it? Take the emotion out of your decisions. Double down on your budget, review expenses (what is necessary?), and your #1 priority: establish and build your emergency fund.
INFLATION. It’s stingy, and some believe higher prices are here to stay. It’s okay to expect the best-case scenario, but it’s also prudent to plan for the worst-case scenario. That means determining your budget and expenditures as if the prices won’t change for a while—which they probably won’t.
What can I do about it? Have a plan. Budget and plan annual expenses (e.g., taxes, Amazon, insurance premiums, etc.). Be mindful of where you shop, and take advantage of high-yield accounts (keep reading).
INTEREST RATES. The Fed says it will begin cutting interest rates this year, but it may be next year or beyond before you get a break. Why? Once the Fed makes the cut, it generally takes 2-3 months to trickle down to lenders and get to you. There isn’t much difference between 7% and 6% anyway, and that’s probably the most you could expect in 2024.
What can I do about it? Add to your emergency fund. Think twice about big-ticket purchases. Pay off high-interest credit cards. Save and invest (keep reading).
TAXES. I speak from experience here. Don’t wait for your tax bill or refund. Plan for it! If you know you have taxes coming, put aside funds for that expense.
What can I do about it?
- Adjust your withholding. If you get hit with a big tax bill every year, it’s entirely possible your employer needs to withhold more. You can change that! Adjust your W-4.
- Itemize. Ask your CPA about this. Make sure you get credit for everything possible.
- Add to your HSA or retirement. I’m a massive fan of HSAs. You can download the details HERE.
- 529 Plan. If you or your child are planning to go to college, invest in a 529 plan. You can check one out HERE.
- File electronically. What? That will save me money? Yes, the IRS finds that 20% of paper returns have errors, many of which would be averted if you file electronically.
- Get a CPA. Yeah, I know they cost $$$. But over the years, I’ve saved more than they cost me. They are the pros. They know more than you, so bite the bullet and save some $$$.
INSURANCE. Insurance rates are rising nationwide, but other options are always available.
What can I do about it? Conduct your annual review. Check your next renewal and see what the rate will be. Compare rates with others. You can get a trusted Ramsey agent HERE to help you.
SAVINGS AND INVESTMENTS. If you have money lying around, do something with it. Even if it’s pennies and nickels, put it to work in a high-yield savings account or work with an investor who can start making you money.
What can I do about it? Start gaining interest on your savings.
POLITICS. Simply put, it’s an election year. All bets are off. Whether you want to or not, you’re involved in the election process. Politicians will use the economy, inflation, interest rates, and other matters to their advantage, and you’re at a disadvantage. I don’t suggest going into your cocoon for the process but be aware that the rest of ’24 will be volatile, and plan accordingly.
What can I do about it? Avoid the political conversation and stay the course when it comes to your money. Don’t make hasty decisions out of fear, and stick to your game plan.
FINAL THOUGHT. Enroll in our Jumpstart: Managing Your Money course in May. It’s a small group that will meet four Tuesdays in May. Ten couples. Only $297. Register today before we’re full. Here’s the LINK.
“Personal finance is only 20% head knowledge. It’s 80% behavior!” ~Dave Ramsey