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9 tips for your New Year's money resolutions

Key takeaways

  • Financial resolutions may be among the best New Year's resolutions for 2024—as many people are still feeling the sting of high prices and rising housing costs.
  • Fidelity's annual New Year's Resolutions Survey has found that paying down debt, saving more, and spending less are the top money goals for those setting them.
  • Our holistic approach to your entire financial picture can help you set yourself up for success no matter what your goal.

A new year can bring a new sense of optimism—particularly when the page is turning on a year like 2023. Though 35% of Americans say they're in a worse financial situation compared to this time last year, 2 in 3 people believe they'll be better off in 2024, according to Fidelity's 2024 New Year's Financial Resolutions Study.1

A positive attitude can go a long way. And setting yourself up for a prosperous year ahead with some savvy planning can help ensure your success.

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What are the best New Year's resolution ideas for 2024?

From stubbornly high prices to rising housing costs to steep interest rates, it's been a year of relentless financial strain for many.

And yet, two-thirds of Americans (66%) are choosing to focus on financial resolutions in the new year. Saving more, paying down debt, and spending less topped the resolutions list in Fidelity's survey.

If those are among your goals, here are 9 ways to make progress in the new year. If you're overwhelmed and don't know where to start or what to do, consider starting with number 1 and going on from there.

Working through even a few of these ideas can help strengthen your financial foundation and make it easier to pay down debt, spend less, and save more.

1. Inventory your finances: Review your income, expenses, debt balances, and the interest rates you're paying

The first step to achieving any kind of financial goal is getting organized and finding out where you stand now and where you want to be. So set aside 30 minutes to an hour to take inventory of your financial life. This can help you prioritize your goals and understand how much money you may be able to put toward them.

Here's what to look for:

  • What is your monthly take-home pay?
  • How much do you pay for essential expenses, like food, health insurance and housing?
  • How much do you typically spend on nonessential expenses, like entertainment and shopping?
  • And if you have debt, what are your balances, interest rates, and minimum payments? Payments on debt should be considered part of your essential expenses.

Being able to see all of these facts and figures in one place will allow you to map out your approach, whether the goal is to reduce your expenses or pay off debt—both of which have the benefit of freeing up more of your income to save and invest.

Track your financial information in one place, for free: Full View

2. Review your budget to make room for future priorities

A budget isn't etched in stone. It's meant to be fluid and change as your lifestyle and needs evolve. Setting some guardrails can help you stay in control and aware of where your money is going. Take saving for retirement, for example: Without a budget or a plan, long-term savings may not get as much attention as they could.

Your budget may look different from the last few years if you're a student loan borrower, since payments resumed in the fall. Or perhaps your rent payment is set to increase at the beginning of the year. Stubbornly high costs and rising expenses that are out of your control can throw your finances out of whack but planning ahead—if you aren't already doing it—can help you stay on track and making progress.

On Fidelity.com you can easily create a budget to categorize expenses and help reach your savings goals: Help me budgetLog In Required

If you need help keeping day-to-day spending and saving on track, check out a money-management app like Fidelity Bloom®.

3. Protect your wallet from the unexpected by maintaining at least minimum insurance coverage

It is not easy to build up your financial foundation, so it makes sense to protect what you've worked hard for. One of the best ways to do this: maintain at least minimum insurance coverage.

Many employers provide health, life, and disability insurance coverage for employees. The cost is generally lower than buying coverage for yourself so taking advantage of the benefits offered by your employer can be an easy way to cover all your bases.

Insurance is like the umbrella you don't think you'll need. It may turn out to be the only thing that protects you from the storm. Having insurance for unlikely but potentially expensive events can help make sure your daily life can continue smoothly while continuing to move forward toward your goals.

Estimate how much life insurance coverage you may need to replace your income and find out how much it may cost: Term life insurance quote

4. Save for future health care expenses with an HSA or FSA

A health savings account, or HSA, is available to you if you're enrolled in a high-deductible health plan. If you have health insurance through an employer, it may offer an HSA. Plus some employers may offer to make contributions to your HSA (which count toward the annual HSA limit.) If you have a health plan from the Affordable Care Act Health Insurance Marketplace or state exchanges, consider opening a Fidelity HSA.

You can think of an HSA like a hybrid savings account. The money you contribute is earmarked for medical expenses and has no expiration date. Once you reach a certain balance, you can invest some of the funds for more growth potential.

The best part is that HSAs offer a triple tax benefit: you don't pay taxes on money you contribute, any part of the balance that's invested has tax-free growth potential, and money you take out is tax-free when you spend it on qualified medical expenses.2

Read Viewpoints on Fidelity.com: 3 healthy habits for health savings accounts or consider opening a Fidelity HSA

If you don't have an HSA-eligible health plan but do have access to a flexible spending account (FSA) through your employer, it can be worth considering. Like an HSA, the FSA lets you set aside money before it's been taxed to pay for health care costs. Any withdrawals are also tax-free, provided you use them to cover qualified medical expenses.2

An FSA can help increase the money you have available to pay for medical bills. But it's important to know that funds saved in an FSA generally must be used in the same year as the contribution. This means that when the new benefit year begins, you may forfeit whatever funds remain in the account from the prior year. Some employers may allow you to carry forward a small amount of your unused balance or can offer a grace period (normally up to 2.5 months). Check with yours to see if you can carry over a portion of your FSA at year end.

Read Smart MoneySM on Fidelity.com:HSA vs. FSA: Which is right for you?

5. Set aside cash to cover emergencies like car repairs, medical bills, or job loss

After a trying and unpredictable few years, nearly 8 in 10 Americans plan to boost their emergency savings in 2024.

Maintaining an emergency fund can help you avoid going into debt to pay for an unexpected one-time expense, like a car repair or medical bill, or a long-term misfortune like losing your job. Having cash on hand and accessible in a savings account or money-market fund means an unforeseen event is less threatening to your financial well-being and your goals.

A fully funded emergency fund may sound like it could take a long time so setting a smaller goal could make it easier to achieve. It can be a good idea to start strong with a target of $1,000 or 1 months' worth of expenses. Keep contributing to your emergency fund until you feel well prepared.

Consider investing your cash in a money market fund or CD, which currently offer higher rates than most savings accounts: Help your cash work harder

6. Try to get the full 401(k) match from your employer (if you have one)—it's like free money

As you're getting everything in order for the near term, long-term goals might get put on the back burner. Since retirement is such a big goal and time is so important to reaching it, saving what you can spare now makes good sense—particularly if your employer offers a 401(k) match. The match is like free money so try to save at least enough to capture the entire amount.

Let's say your employer matches 100% of your contributions, up to $3,000 a year. That means you need to contribute $3,000 to boost your 401(k) by $6,000.

As with any investment account, be sure to review your asset allocation—that is, how your money is divided among stocks, bonds, and cash. Make sure it aligns with your appetite for risk and your financial goals, and is appropriately diversified.

Read Viewpoints on Fidelity.com: 6 ways busy people can help build their wealth and 3 keys to choosing investments

7. Keep more of your money for yourself by paying down high-interest credit card debt

High-interest credit card debt can be a drain on your finances. Rather than saving and investing for your future goals, money goes to pay off past purchases.

Get a clear sense of your debt and tips for paying it off: Debt dashboardLog In Required

Paying more than your monthly minimum payments can speed up your debt repayment and reduce your interest charges. If you have multiple balances to pay down, consider concentrating all your efforts on the card charging the highest interest rate for the most efficient paydown strategy (but continue making minimum payments on all cards) to eliminate that balance as soon as possible.

Another strategy, called the snowball method, suggests starting with the smallest balance first and then rolling those payments into the next smallest balance once the first is out of the way.

Read Viewpoints on Fidelity.com: The debt snowball method vs. the debt avalanche method

The sooner you stamp out high-interest debt, the sooner you can reroute the income toward the future. For Fidelity's take on navigating saving while paying off debt, read Viewpoints on Fidelity.com: How to balance debt, saving, and investing

8. Prepare for serious emergencies with a fully funded emergency fund

Once you have a strong foundation, try to build a more robust emergency fund that could provide a strong defense against an ongoing emergency like a job loss. Fidelity suggests setting aside 3 to 6 months' worth of essential expenses for your emergency fund. For example, if you spend $5,000 a month on rent, food, and insurance premiums, you should aim to have $15,000 in a safe, no-risk account.

Exactly how much you need depends on your personal financial situation. One thing to consider: The fewer earners there are in your household, the more money you could consider saving. Read Viewpoints on Fidelity.com: How much to save for emergencies

9. Pay down debt with an interest rate above 6%

At this point, you may have already paid off any high-interest credit card debt. But you may have other debts with relatively lower interest rates, like a car loan for instance.

Fidelity suggests that if the interest rate on your debt is 6% or greater, you should generally pay down debt before investing additional dollars toward retirement. Read Viewpoints: Should you pay down debt or invest?

Take the first steps

Start the new year off right by taking one of these money-smart steps to get control of your finances. If you need help, call a Fidelity representative.

Get organized, hit your goals

Create a flexible plan you can adjust to your life.

More to explore

1. About Fidelity Investments’ 15th Annual New Year’s Financial Resolutions Study This study presents the findings of a national online survey, consisting of 3,002 adults, 18 years of age and older. The generations are defined as: Seniors (78+) (78 respondents) Baby Boomers (ages 58-76) (758 respondents) , Gen X (ages 42-57) (683 respondents), Millennials (ages 26-41) (1,015 respondents), and Gen Z (ages 18-25) (468 respondents); although this generation has a wider range, we only surveyed adults for the purposes of this survey. Young is defined as those ages 18-35. Interviewing for this CARAVAN® Survey was conducted October 20-29, 2023 by Big Village, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study. Go here for more information on Fidelity’s 2024 New Year’s Financial Resolutions Study. 2. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.

The information provided here is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, customers should be strongly encouraged to consult their tax advisor before opening an HSA. Customers are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS Web site at www.IRS.gov. They can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses (including the Health Coverage Tax Credit),online, or you can call the IRS to request a copy of each at 800.829.3676.

Investing involves risk, including risk of loss.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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