The economy enters 2025 in reasonably good shape, with a low unemployment rate, modest inflation, a downward trend in interest rates and strong corporate profit growth that has been giving a boost to the stock market. .
Therefore, it is not a bad backdrop to start over to improve your finances. Here are some trends, issues and tips we’ll be keeping in mind in the coming weeks:
New Year’s resolutions can give you the motivation to improve your financial situation in many ways, such as developing your retirement plan, reviewing your insurance policies, or starting (or updating) an estate plan.
However, the resolution most Americans are focused on heading into 2025 is more basic: put more money into emergency savings. You can hold money in a variety of forms, from a money market mutual fund to staggered bank certificates of deposit (those that mature at intervals, such as every three months).
The idea is to have enough liquid cash to cover large unexpected expenses and earn at least a modest return in the meantime.
In a Fidelity Investments survey, 72% of respondents said they suffered a notable financial setback this year, and nearly half had to dip into their emergency funds to pay for it. So it’s no surprise that 79% of respondents expect to increase their cash reserves, 38% worry about unexpected expenses and 20% say another surprise could set them back in 2025. Women, more so than men, said They didn’t have an emergency. fund to fall back on, but 80% of them resolved to build one in 2025.
One new rule that could help some of the most hard-pressed consumers is one requiring lower overdraft fees at banks.
The federal Consumer Financial Protection Bureau in December issued a final rule that it said will reduce typical overdraft fees from $35 per transaction to $5, saving an average of $225 annually for the approximately 23 million households that pay such fees.
Critics of the bank argue that the charges hit low-income people hard.
Overdraft fees are “a form of predatory lending that exacerbates wealth disparities and racial inequalities,” Carla Sánchez-Adams, senior staff attorney at the National Consumer Law Center, said in a statement.
Some banks, including Capital One, Citibank, and Ally Bank, have already eliminated these fees.
Consumer advocates praise the new rule but warn that it risks being repealed by Congress. That, they say, could be achieved with a simple majority vote in the Senate and House, with limited debate.
The IRS suggests several steps that can be taken soon for people hoping to get ahead of the 2024 tax filing season. These include collecting and organizing tax records, making a fourth quarter estimated quarterly payment (if necessary) before on January 15, 2025 and open an IRS online account. Income brackets, deductions, and other tax aspects have changed somewhat due to inflation adjustments.