It’s always a good idea to take stock of your finances as a new year begins. Are you meeting your financial goals, for example? Are there any financial moves you should make now to optimize your financial life? In 2023, interest rates climbed. Rising rates can affect many areas of your economic life, from mortgages to credit cards to savings. Inflation was also high, although it started to ease later in the year.

It’s important to review your longer-term goals and situation, too. Generation X, born between 1967 and 1982, is now firmly in their middle years. Some may be looking forward to retirement in less than a decade. Others may be supporting their children through college, or their parents through their last years. A new year is a time to make sure you’re on track for not only the coming year but for the coming decades.

Here are three money moves Gen Xers should consider making for 2024.

1. Pay Down Debt

The climb in interest rates has sent annual percentage rates (APRs) on credit cards to record levels. If you have credit card debt, you may be paying more in debt service than you were a few years ago. With an increase in APRs comes higher monthly payments. It’s not just credit cards, of course; interest rates on every kind of debt are higher than they were a few years ago.

High monthly payments for debt can sap your monthly cash flow. You can free up cash flow for goals like savings or purchases by paying down your debt.

The financial freedom you’ve been yearning for starts here.

One useful strategy is to review your monthly expenses with an eye to see if any expenditures can be trimmed. Use whatever you can save this way to increase your debt payments.

Second, if you do have significant credit card debt, you can lower monthly payments by consolidating that debt with a personal loan. Interest rates on personal loans are lower than those on credit cards, so the monthly payments will be less.

2. Maximize the Return on Your Savings

The positive side of 2023’s rising interest rates is that it’s now possible to get a higher return on savings than it was a few years ago. While interest rates on some types of savings accounts are still relatively low, many types of accounts are paying robust rates on savings.

Look at high-yield savings accounts for the highest yields. Certificates of deposit (CDs) also have higher interest rates than many savings accounts. Money market accounts can also offer attractive yields on savings accounts. Be sure to review the terms of any money market account carefully; most money market accounts will let you write a certain number of checks per month but may penalize you if you write more.

Savings are part of a prudent financial plan. It’s advisable to keep several months’ worth of expenses for emergencies. You also want a savings plan to reach your goals, whether that’s saving for your children’s higher education, for a mortgage, retirement, or other objectives.

3. Clarify Your Expectations for Inheriting Assets

The Baby Boomers, in aggregate, have amassed considerable assets as they’ve moved through life. Many have equity in their homes. If they live in an area where real estate prices have appreciated considerably over the past decades, they may have significant equity. They may have investments in stock, bonds, or other markets. They may have retirement funds.

This broad-based general growth in the number of assets and the value of those assets in the Baby Boom generation has significant ramifications for Generation X. At some point, those assets and their value will be transferred to the next generation(s) as parents and older relatives and friends bequeath these assets. All told, an estimated $84 trillion of Baby Boomer wealth will ultimately be passed along to the generations that followed the Baby Boom.

In the coming years and decades, your parents, older relatives, or even older friends may be bequeathing you considerable assets. The assets could be their accumulated savings, stocks or other financial assets, or their houses (or the value of a sold house).

The wealth transfer is significant enough that it’s important to know about it. The wealth transfer can affect your own retirement and plans, of course. But it can also affect the plans and goals of your children and grandchildren. It could be that the wealth transfer can be a path to generational wealth for your entire family through succeeding generations.

However, a successful wealth transfer doesn’t just happen. Here are some suggested steps.

Have a discussion about generational wealth if appropriate

Open communication is important. It could be you know your parents or older relatives’ plans to bequeath their assets to you, your children, or their great-grandchildren. If you don’t, consider planning a conversation (or series of conversations) to clearly discuss what they plan. Remember, the assets are theirs to bequeath as they please. These discussions can be sensitive, of course, and only you know your parents’ or older relatives’ feelings. Stress that you need to know for planning purposes and to ensure a positive and well-planned legacy. 

Make plans for any inheritance

Once you know the older generation’s plans for you and any offspring, you may need to increase your financial knowledge and comfort zone. Any inheritance of assets may require the need to monitor and invest significant sums of money or assets such as stocks, to make decisions about real estate or to make decisions about other assets. It may be prudent to work with a financial advisor to ensure you are making decisions that will meet your goals and enhance generational wealth.

Talk to a Financial Advisor in Greeneville TN About 2024 and Beyond

At Sapiat Asset Management, we specialize in financial planning for Generation X in Tennessee. We can help you review your money moves for 2024 and beyond. We can help you create a solid plan for meeting your own and your family’s financial goals, including savings, budgeting, investing for retirement, higher education, and planning for later life. We are a fiduciary fee-only financial advisory firm located in Greeneville, Tennessee. We will always put your best financial interests first at all times. Contact us today for more information: https://info.sapiatasset.com/contact-us