What we'll cover
How to prepare your finances for 2024
Managing interest rates and inflation
Tips on debt management strategies
As 2024 gets underway, you may be wondering what the new year has in store for your finances. I'll share my expectations for three watch items — interest rates, inflation and debt — as well as ways to prepare your finances for the coming year.
Read more: Give your finances a boost with this checklist for the new year.
Don't sweat the Fed
Coming out of a period of near-zero Fed rates, you might have found it difficult to navigate the recent hikes that happened in 2023 and impacted interest rates on everything from car loans to mortgages to credit cards. Keep in mind that even though the Fed is signaling some rate cuts in 2024, it's likely to be a slow ride down. Prolonged higher rates impact costs for everyone. It should be a consideration if you have credit card debt or are applying for a mortgage in 2024.
But you can prepare your finances by taking advantage of higher interest rates on savings and money market accounts. You can also focus on paying down any existing debt to improve your debt-to-income ratio (a key consideration when you're applying for a mortgage).
Tip: Improving your credit score and bumping up your emergency fund are productive steps to take to better your financial standing.
Prolonged higher rates impact costs for everyone. It should be a consideration if you have credit card debt or are applying for a mortgage in 2024.
Inflation cools
You may have noticed inflation still affecting your wallet, as prices continue to fluctuate into 2024. But inflation appears to finally be headed in the right direction. The Consumer Price Index (or CPI, a top measurement of inflation) sits at about 3.1% with declines in energy and used vehicles, as of November 2023. While that is much better than a high of around 9% in the summer of 2022, we still have a bit to go before we hit The Fed's target of 2%.
If you have already adjusted your spending and saving, keep it up. Understand where you're spending your money and how much, so you can stay flexible in a changing environment.
If you have an Ally Bank Savings Account, you can accelerate your savings with buckets and automate contributions toward your saving goals.
Read more: Use spending and savings buckets together to keep your finances on track.
Debt top of mind
Credit card balances reached a record $1.08 trillion last fall and student loan payments returned in October. Debt is certainly a concern for many, especially if you're adding new payments to your budget for the first time.
That said, having a debt payoff plan is a great way to tackle debt and can help ease any stress you might be feeling. You have plenty of strategies to choose from, such as the snowball strategy — the important thing is to stay consistent.
Keep in mind that not all debt is bad. Good debt ( home loans, for instance) can be an important part of your financial health, as long as you're making regular payments.
Put your best finances forward
A new year is full of possibility and promise. Ebbs and flows in the market are normal, and the key to weathering them is to have plan for your finances: Know your goals, stick to your budget and be flexible as you prepare for whatever lies ahead. Whether your plans include buying a home or taking a family vacation, Ally has the tools to help you cultivate your financial future.
Anand Talwar currently serves as Ally's Head of Deposits and Invest. Since 2017, he's led Ally's award-winning retail deposits business and has been instrumental in architecting digital financial solutions that are simplifying and demystifying money.
During his tenure, Ally has been consistently recognized by customers and the industry as "best in class," including 11 recognitions on MONEY Magazine's Best Online Banks list. In 2021, Talwar and Ally disrupted again, leading the industry in eliminating overdraft fees for good.
The 40 under 40 award winner's nearly two-decade financial services career spans roles in technology, corporate investment banking, digital banking, analytics, innovation and strategy.
