Artificial Intelligence may have been the biggest buzzword in the world, but for most Americans, it might as well have been the high cost of living. According to a Bloomberg report the cost of nearly every household item, from curtains, and car insurance to rent, has increased since 2020.

Groceries and electricity are up 25%, auto insurance is up 33% rents are up 20% and restaurant food is up 24%. The same report said that an American needs an average of $119.27 to buy household goods, that cost $100 before the pandemic. Add to that, the high interest rates on credit cards and housing loans.

For 2024, it is a good news and bad news situation. While inflation may carry forward next year and prices will continue to soar, the economy is expected to do a soft landing with projected GDP growth of 1.5%. The US might just be able to avoid the recession.

Since there is no actual crystal ball to confirm the aforementioned, we look at the likely trends that could impact your finances in 2024 and how you can prepare for them better.

Financial Trends in 2024

1) Social Security Benefits 2024

Social Security benefits help retirees cope with inflation every year. Social Security Administration (SSA) adjusts the amount of Social Security payouts in response to rising inflation. While the cost-of-living adjustment, or COLA, touched 8.7% this year, in 2024 it will be a smaller figure ie 3.2% as the inflation cools down.

Additionally, people who are retiring at full retirement age in 2024, will be able to reap the maximum benefit up to $3,822 per month, a jump from $3,627.

The Social Security Wage Base for 2024 is set at $168,600, which means that earnings above this amount are not subject to Social Security taxes.

Also Read: Understanding COLA: How Social Security Benefits Keep Pace with Inflation

2) Tax brackets 2024

The Internal Revenue Service (IRS) has announced new inflation-adjusted income tax brackets and standard deduction amounts for 2024.

The US federal income tax code has seven tax rates – 10%, 12%, 22%, 24%, 32%, 35% and 37%. Here’s a breakdown of income tax brackets:

10%: Income up to $11,600 

12%: Income over $11,600 

22%: Income over $47,150 

24%: Income over $100,525

32%: Income over $191,950

35%: Income over $243,725

37%: Income over $609,350

Standard deductions:

The new federal standard deduction will increase to $14,600 from $13,850 in 2023 for individuals and married people filing separately. 

For married couples filing jointly, the standard deduction will be $29,200 from $27,700 in 2023.

The standard deduction will be $21,900, from $20,800 today for people who are the head of the household.

Please note: The new tax brackets are for tax year 2024, for which returns will be due in April 2025. The tax year 2023 will end on Monday, April 15, 2024, which means you can pay taxes and file for returns before this deadline.

Also Read: 7 Strategies to Help You Save Money on Your Taxes

3)Job Market 2024

According to a Forbes report, the job market for Americans is likely to improve thanks to the cooling inflation, steady interest rates and optimistic outlook for the economy. 

These three factors can lead to an increase in investments, thereby an expansion in the job market.

“Employers may be more inclined to hire and invest in talent as economic conditions improve. As the economy and stock market improve, growth can create opportunities for job seekers, as companies may seek to expand their workforce and invest in innovation to meet growing demand and capitalize on market opportunities. This could lead to a more favourable environment for job seekers, with increased job openings and potential for career advancement,” the report reads.


However, a report by Goldman Sachs paints a completely different picture. According to the management firm, the $2 trillion corporate debt wall is likely to shake the economy, resulting in 5,000 job losses per month in 2024.


4) Student Loan and Debt 2024


Interest rates for debt consolidation loans are likely to remain high in 2024 according to a Forbes report. Consolidation loans combine all your outstanding payments into one loan to help you pay your debt faster.


As for Biden’s student loan forgiveness program, the new plan is likely to be narrower in its reach. It will cover only 10% of student loan borrowers according to higher education expert Mark Kantrowitz. If successful, the debt cancellation will take place during the 2024 presidential election.

Also Read: Didn’t Get Student Loan Forgiveness? Other Alternatives To Tackle Student Debt


5)Personal Loans 2024

To control inflation, the Federal Reserve and central banks have been hiking interest rates since March 2022. By the end of 2023, personal loan interest rates rose rapidly due to various economic factors. This has led to an increase in borrowing costs including personal loans. 


While it is not certain yet if the high interest rates will continue in 2024, experts are predicting lower interest rates by the end of next year.


“I think rates will start cutting in early 2024,” Preston Caldwell, a senior U.S. economist for Morningstar Research Services LLC told CNBC. “I think inflation will be nearing the Federal Reserve’s 2% target at that phase and the economy will show signs of slowing, but it’s hard to predict.”


“All FOMC (Federal Open Market Committee) members believe that rates will be stable or higher through 2023 before slowly coming down in 2024–2025 to settle at a comfortable 2.5% for the longer term,” Amy Hubble, a certified financial planner told CNBC.


Things You Can Do For A Solid Financial Plan

1)Save, Save & Save 

Open a high-yielding savings account and then work towards building an emergency fund, retirement account and debt payoff plan. You should save enough money to cover three months of rent, food, utility bills and car payments. 

You can also check Certificates of deposit (CDs) to get good returns on your savings. CDs have better interest rates than traditional savings accounts.


2)Max out 401(k)

If you have the 401(k) plan at work, try to save enough to get the full company match. For example, if your employer is offering a 3.5% match, contribute at least that amount per paycheck. You can gradually increase your contributions to 10% of your paycheck.

“I believe the worst financial move people can make in 2024 is not taking full advantage of their employers’ match on their retirement plan,” Lawrence Sprung, CFP, founder of Mitlin Financial and author told CBS News. “There are not many times in life that you can receive ‘free’ money, but this is one of them.”


Also Read: Finance 101: Do You Know The Basics of a 401(k)

3)Diversify Your Income

You must have heard financial gurus use the famous saying ‘Not putting all your eggs into one basket’ more often than not. They are right. You can remember this philosophy when you start earning. Pick up a side hustle or two that helps you build new job skills. This way, even if you get laid off, you have something to fall back on. 

Also Read: The Top 15 Best Side Jobs You Can Pick-Up Now

4)Pay off High-Interest Credit Card Debt

The higher the interest rates, the more difficult it will be to pay off the compound on your debt. You can start your 2024 by settling high-interest credit card debt. Make timely and full payments. Once you are done with it, you will have more money to save. You can make use of debt consolidation loans to pay the principal balance faster.

While at it, you can also try and improve your credit score by paying off debt, making timely payments, requesting a credit limit increase and avoiding new credit cards. 

Bottom Line

As 2023 comes to an end, it is time to review your finances and set new practical goals for 2024. You can consult a financial advisor or a tax accountant to help you plan better.