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There is no one-size-fits-all savings strategy. But with interest rates expected to fall later this year, you might be reconsidering your 2024 savings plans.
Currently, interest rates on savings accounts and certificates of deposit remain high. However, interest rates on borrowings will also rise, making repayments on credit card debt and loans more expensive. Combined with high prices, it can become more difficult to take advantage of high savings rates.
Depending on your financial goals, you may not need to change your current savings strategy. “Rather, the beginning of the year is a time to review your finances and plans,” says Alaina Fingal, owner of The Organized Money and member of CNET’s expert review panel.
Even if a decline in your savings rate is on the horizon, there are still strategies you can implement to maximize your savings. Here’s what CNET Money experts recommend for the year ahead.
Alaina Fingal
Certified Financial Coach and Founder of The Organized Money
Bernadette Joy
Money Coach and Founder of Crush Your Money Goals
Lanesha Mohipp
Corporate Accountant, Founder of Polished CFO
Rita Soledad Fernandez Paulino
Money Coach and Founder of Wealth Para Todos
look at your budget carefully
We all have short-term savings goals, like building up a sinking fund for our next trip. But if you’re struggling to save money, Fingal recommends first looking at all your expenses.
“If you’re looking to get serious about saving this year, I like to look at your budget, bill list, and debt situation to determine what your current savings capacity is,” Fingal says.
List all your bills and regular expenses like gas and groceries. Next, subtract your monthly expenses from your income to calculate how much money you have left. Once you know what’s coming in and going out of your account on a regular basis, you can set realistic savings goals.
If you don’t have as much money left as you expected, consider saving as much as possible, such as reevaluating your cell phone plan or comparing car insurance.
Easy to save money
“When you try to save a lot of money, you often fail and end up putting that money back in your checking account. Starting small makes it easier to build a habit.”
Setting big goals like saving $10,000 by the end of the year may sound appealing, but if you’re just starting out, achieving such lofty goals can be difficult. If you start small and use tools like automatic transfers, you can make great progress.
“If you’re new to saving, set up payday automatic transfers for 2% to 5% of your income. Starting small allows you to keep your money in a savings account and grow it over time. ” said Mr. Fingal.
You can take the guesswork out of saving by setting up automatic transfers to a high-yield savings account. Automatic transfers can also help you avoid the temptation of spending, as they are immediately moved to your new account.
For example, let’s say you were able to cut two streaming subscriptions and get an extra $30 per month. You can set up an automatic transfer to move this amount from your checking account to your savings account once a month. Once you have more money freed up, you can change the amount you transfer to further increase your savings.
“When you try to save a lot of money, you often fail and end up putting that money back into your checking account,” Fingal said. “Starting small makes it easier to build habits. Once you develop a habit, it becomes easier to save more money over time.”
Experts recommend comparing savings interest rates, bank fees, and other features before opening a new savings account. Enter your information below to see the lowest rates from CNET partners in your area.
Make 2024 the year you build your emergency fund
Emergencies (and their costs) can be inconvenient and expensive. The best way to prepare for unexpected expenses is to save. If you don’t, you may end up relying on debt to cover your costs, which can put you in even more financial trouble, especially if your credit card has an average annual interest rate of more than 20%.
If lofty goals for emergency fund savings are daunting, you may find it helpful to set more manageable goals for 2024.
Bernadette Joy says, “While many people start with three to six months worth of savings as their emergency fund, I recommend starting with one month’s worth of expenses and then focusing on paying off credit card debt for the rest of the year. “We are telling them,” he said.
Experts agree that high-yield savings accounts are the best place to store your emergency funds. High-yield savings accounts have higher interest rates overall, can access funds within three to five days, and are FDIC or NCUA insured, Fingal said.
Let’s try the savings challenge
Social media is full of savings challenges that will motivate you to reach your 2024 savings goals. No-spend months, such as “No-spend January,” encourage people to pay only for essentials in order to put money toward savings.
You can also take advantage of Gen Z’s new savings strategy: soft savings. Soft savings focuses on finding balance in your household finances within your control. For example, instead of focusing on retirement, you can focus on growing your emergency fund or paying off debt. Rather than trying to find room to meet every possible money goal, it’s a gentler approach to managing your money little by little.
Even if you didn’t start the new year with a money-saving challenge, there’s still time to start. For example, the Eat-In Challenge encourages people to save money by shopping for groceries or cooking their own meals instead of eating out. Even if you only stick with the challenge for a month, you could add extra money towards your goal. You can also try other challenges throughout the year, such as closet shopping in February and doing only free leisure activities in the spring.
be realistic about your goals
If you’re trying to save $12,000 by the end of the year, that means you need at least $1,000 in additional cash flow each month.
A lot can happen within a year. You may have started planning your 2024 vacation at the end of last year. Or maybe you have the same goals but find your priorities have changed. You may need to buy a car or need funds for home repairs. While this year’s financial plan may still be doable, experts recommend being realistic and pivoting if necessary.
Lanesha Mohip, owner of Polished CFO Solutions, recommends checking your progress toward short-term savings goals and making any necessary adjustments. If you bought a car last year and have an unexpected car payment, you may want to invest less in your vacation fund to free up space in your budget for new expenses, Mohip says. says. But it’s important to be honest about your expenses and how much money you have left toward your goals.
“Be very realistic about your savings goals,” agrees Rita Soledad Fernández Paulino (aka Soledad), personal finance coach and founder of Wealth Para Todos. .
“If you’re trying to save $12,000 by the end of the year, that means you need at least $1,000 in additional cash flow each month,” she says.
Soledad added that setting a savings goal will be more difficult if you can’t find room in your budget to reach this $1,000 goal or if you don’t know where to spend your money each month.
But if you’re already confident in your savings strategy, now is the time to focus on maximizing your returns with interest rates high. If you have money set aside that you won’t need for a few years, locking in a high CD rate now before interest rates go down can give you guaranteed interest. You can also compare bond accounts and high-yield savings accounts to see if you’re getting the best interest rate possible, Mohip says.
No need to worry about finding the “best” rate
If you’re already getting a fairly competitive rate, you don’t have to worry about getting the best rate possible. There may only be a difference of a few cents between the return you get on a 4.25% APY savings account and the 4.50% return offered by other banks. Additionally, moving funds while interest rates keep fluctuating can mean more effort for the same return.
Instead of chasing yield, focus on putting your money to work as quickly as possible. Find a high-yield savings account where you can safely store your money. Even if you don’t have the highest APY, you should be able to deposit and withdraw money when you need to. Unless you’re putting your money in an account that gives you a small amount on your savings (like 1.25%), you’ll still get a decent return on your savings, whether it’s 4% or 5%.
“Yes, we want to get the highest rate of return on our investments and savings,” Soledad said. However, she still emphasizes the importance of increasing savings rather than chasing high interest rates. Otherwise, she warns, you may have to rely on debt and find yourself in a financially unstable situation.
Reconfirm your retirement goals
In 2024, you should focus on paying off all consumer debt and securing an emergency fund before considering investments this year.
When thinking about the future, Mohip also recommends looking at last year’s retirement investment portfolio. Interest rates may change to your advantage or disadvantage to your investment, so you may decide to make a change. Long-term goals like retirement or sending your kids to college may be decades away. But experts recommend investing now for long-term goals if possible.
“At the start of a new year, always review your retirement investment portfolio over the past 12 months to see what your asset mix is and whether changes in interest rates have helped or hurt your investment returns. We recommend that you look at , which means long-term growth,” Mohip said.
But above all, personal finance coach Bernadette Joy recommends setting short-term financial goals before investing, especially if you’re living paycheck to paycheck.
“In 2024, your focus should be on paying off all consumer debt and securing an emergency fund before considering any investments this year,” Joy said.
Track your savings progress and celebrate milestones
As you balance your daily expenses with other priorities, keep an eye on your progress toward your financial goals. Every step is important.
You may want to try a visual representation, such as a color-coded savings tracker to show your progress. Or you can write it down on a chart by month. Apps like You Need a Budget and Loot also offer ways to virtually monitor your progress.
“It’s good to be aware of your progress and celebrate it,” Soledad said.
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