As the new year kicks off, Investopedia sat down with three financial advisors to find out what investors should be thinking about in 2024. 

1. Emergency Savings Are the First Step

One sentiment that all three financial advisors echoed was that having emergency savings set aside is essential and should be prioritized ahead of other investment and savings goals.

In 2023, inflation affected not only people's spending but also their savings.

"Ensure you have enough saved for emergencies. It's a good rule of thumb to have about three to six months of living expenses in an emergency savings account, to be used in the event of a major expense or job loss," Ashley Kristine Rittershaus, a certified financial planner (CFP) and founder of Curious Crow Financial Planning, told Investopedia.

"When the unexpected happens, a solid emergency fund means you're less likely to need to pull money out of investments or rack up debt to cover it," Rittershaus added, highlighting the sometimes-overlooked value of an emergency fund for investors looking to shore up the resilience of their portfolio as they grow their wealth.

2. Align Your Portfolio With Your Timeline

Create a savings and investing plan that works with you and your goals. Consider which upcoming life events could require accessible cash and try to predict when they might occur.

Important factors when creating this plan include making sure "your portfolio is invested appropriately based on when you will need the money and the amount of risk you can tolerate," Rittershaus said, explaining that "money for a down payment on a home in two years, savings for college in seven years, and a retirement account needed in 30 years will all likely be invested quite differently" and should be reflected in your asset allocation.

Because each investor is different, there is no one-size-fits-all approach, but some common solutions to build savings include automating contributions to an employer-sponsored retirement plan or setting up automatic transfers to savings accounts.

3. Tackle Debt

As inflation impacted consumers' finances during 2023, some investors may have struggled to make a dent in existing debt or could have incurred new debt.

Though the average debt for adults in the U.S. has been steadily declining in recent years, it is important for investors to form a plan to pay off debt, especially as high interest rates persist.

"Debt in and of itself isn't necessarily a bad thing," Crystal McKeon, chief compliance officer at TSA Wealth Management, told Investopedia, saying that debt "can allow you to buy things that you wouldn't be able to buy normally like maybe a house or a car," but debt has to be for the right kind of expense. For example, "loading up on something like credit card debt isn't the same as" a mortgage to buy a house, McKeon said.

The right way to pay off debt is the way that works for you, McKeon added, explaining that paying off the highest interest rate first may work for some, while others may find this method overwhelming and opt to pay off the smallest debt first. These two approaches to paying down debt are known as the debt avalanche and debt snowball strategies.

Both McKeon and CFP Rittershaus noted that they generally recommend their clients use free funds to pay off debt rather than trying to make a profit through investing that money.

4. Plan for Taxes

Previous tax returns can typically serve as a guide for what to expect for the coming year, though there could be a major change in U.S. tax laws coming.

"As of now, the tax brackets that exist in 2023 will exist in 2024 and 2025," Sean Michael Pearson, CFP, at Ameriprise Financial Services, told Investopedia, saying that "the current tax law is set to sunset [in 2026], which means that the rates and brackets will return to where they were previous to the most recent tax cut in 2018."

The Tax Cuts and Jobs Act (TCJA), which went into effect in 2018 and remains in force through 2025, made some significant changes to both business and personal taxes. 

"We do not know what [tax brackets] are in the future," but "there's a possibility that brackets could be a little bit higher," Pearson said. According to this CFP, the likelihood of higher tax rates ahead could lead some investors to hedge their bets during the 2024 and 2025 tax years by taking actions including contributing to an after-tax Roth account versus traditional pretax individual retirement accounts (IRAs).

Considering upcoming taxes can help investors better understand their finances and avoid a situation where they have to dip into savings or investments to pay a higher-than-anticipated tax bill.

5. Consider Predictable Middle-Term Costs

People often consider the short term with emergency savings and the very long term through retirement savings, but they may overlook saving for the expenses in between.

"As important as retirement savings are, there are plenty of responsibilities that we need to fund prior to age 59.5," Pearson told Investopedia. The financial advisor said that, while "buying a new home or vacation property, investing in a business, helping adult children with expenses, and funding your child's senior trip might be several years away," these are the types of expenses that he classifies as "unexpected" rather than "unpredictable." 

Pearson used the example of children's braces, an often-costly expense for parents, saying that "when you have kids 2 or 3 [years old], you're not really worried about their braces," but when the orthodontist bill does come, "it's not unexpected." These are the types of intermediate expectations that Pearson encourages his clients to consider, stressing the importance of having savings to account for the kind of expense "that you cannot always quantify until you need it in a pinch."