Trends in 2024: Personal Finance | News

Consumers rode the financial roller coaster into 2023. High interest rates have persisted, with a growing number of Americans believing inflation is the new normal It is 57 percent of employees cite finances as the main cause of stress.

In the new year, will Americans simply continue to survive, or will consumer spending tell a more optimistic story?

Wenyao Hu, Ph.D., C.F.A.assistant professor at the School of Management, shares his predictions.

“In response to inflation, the Federal Reserve has raised the federal funds rate since the beginning of this year, but forecasts, including those of Goldman Sachs, suggest a possible reduction in rates in 2024 if inflation decreases. This anticipated change aims to avoid economic slowdowns, reflecting the 2019 strategic rate cuts in a context of stable unemployment and inflation rates,” says Hu, who also advises investors to consider exploring alternative investment opportunities beyond quasi-assets. insurance.

He also predicts that 2024 will be an interesting year to watch Gen Z spending and savings trends.

“Gen Z is leading a ‘soft savings’ trend, prioritizing quality of life and current experiences over traditional savings,” he says. “This means they are more likely to spend money on things that bring immediate happiness and are open to investing in causes that reflect their values.”

For many Gen Zers, as well as others, there’s a good chance this means prioritizing entertainment spending.

“The post-COVID era is witnessing a rise in the gig economy, exemplified by the success of Taylor Swift’s ‘The Eras Tour’. This trend demonstrates a strong consumer appetite for in-person entertainment experiences, significantly boosting local economies,” says Hu, adding that Swift’s tour had a notable economic impact, with each show grossing approximately $13 million and generating spending. substantial share of consumers.

“This phenomenon is not just limited to ticket sales, but also extends to expenses related to travel, accommodation, meals and retail, which significantly benefits local businesses”, he states.

Savvy investors could also have potential opportunities to capitalize on the gig economy. Hu notes that individuals can profit from the “concert economy trend” by investing in businesses related to the entertainment and events industry, such as event management companies, ticketing platforms, hospitality and transportation services that benefit from the rise. of consumer spending around major events. Additionally, investing in stocks or funds related to the entertainment sector can be a strategic way to leverage this growing trend.

Hu also shares the following tips for improving personal finance habits in the new year:

• Create a realistic budget that tracks your income and expenses. This helps you identify unnecessary expenses and gives you a clear picture of where your money is going.
• Set aside savings for unexpected expenses, such as medical emergencies, car repairs or job loss. A good rule of thumb is to have at least three to six months of living expenses in an easily accessible savings account.
• Prioritize paying off high-interest debts, such as credit card balances or payday loans. The interest on these debts can add up quickly, making it harder to save or invest your money effectively.
• Regularly assess your career and income prospects to align your investment strategy accordingly, ensuring a complete approach to managing your financial portfolio.
• Consider your future income potential, or human capital, as a fundamental asset in your financial planning. If your income is stable, you can safely invest more aggressively. On the other hand, in the case of variable income, a cautious investment approach can balance the overall risk.
• Take advantage of financial technology by using apps and online tools to budget, track expenses, and manage investments. Many of these tools offer personalized insights based on your spending habits and financial goals, and can automate savings or investment contributions.
• Continuously educate yourself about personal finance. Regularly read books, listen to podcasts or follow financial blogs, which can provide valuable information and strategies for managing your money more effectively.

This article is part of the “Trending in 2024” series, which features perspectives from New York technology experts on emerging trends, tips, and predictions for what’s to come in the new year.

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