As we bid farewell to the current year, now is the perfect time to revisit financial objectives and start planning for the upcoming year. Here are three personal finance resolutions households should consider for the new year.
Don’t go broke trying to save
Automatic enrollment and automatic escalation features have helped American workers participate in 401(k) plans and accumulate significant retirement savings. However, if you carry large credit card balances, then contributing to a 401(k) plan might create more harm than good.
Ideally, people should not carry credit card balances. However, as inflation hit U.S. households, many turned to their credit cards, causing card debt to increase materially. Compounding this problem, credit card interest rates are elevated, as the U.S. Federal Reserve raised interest rates to combat inflation. Accordingly, households with credit card balances pay more interest than they did when interest rates were lower. Paying interest on credit cards benefits only the banks that issued the credit cards.