(WKBN) – Financial experts say the new year is the perfect time to assess your finances and set goals for 2024.
For many people, paying off debt and increasing their emergency savings are the biggest goals for the new year.
According to Chris Mediate, a financial advisor at Mediate Financial Services, before setting goals, the first step is to assess your expenses and income, then make a plan.
“If you want to do an inventory or do a budget, you think, ‘Okay, what changes can I make all at once?’ Most people would probably give up, and that’s what happens. If you break it down into small steps, I think you’ll see some success,” Mediate said.
Investment advisor Deanna Rossi emphasizes the importance of building an emergency fund.
“Only 27% of Americans have six months’ worth of expenses stored somewhere liquid (i.e., a rainy day fund). They need to make sure they do that.” she said.
Rossi said you shouldn’t try to pay off all your debt before increasing your savings. Without a nest egg, it’s hard to prepare for unexpected expenses, and you can find yourself in an even deeper hole.
“What ends up happening is an emergency happens. The carburetor blows, right? A tire goes flat, the furnace breaks, something happens. And they go into debt. I was paying it off, but I didn’t have any money saved up for emergencies. So guess what? Eventually they end up putting it back on the credit card, so I always end up in this cycle. “I’m doing it,” Rossi said.
When it comes to credit cards, Rossi advises using a roll-down method, paying off the card with the highest cost index first and then moving on to other cards.
Mediate said it’s also a good time to evaluate credit card and mortgage interest rates, as the Federal Reserve expects to cut interest rates this year.
“A difference of 1% can make a huge difference in the interest you pay and help you make payments, so now is the perfect time to start thinking seriously about where and how you can take advantage of your interest,” Mediate said. .