It's Time To Reset Your Finances For 2025's Knowns and Unknowns
It's Time To Reset Your Finances For 2025's Knowns and Unknowns
J.J. McCorvey Updated Wed, January 1, 2025
2025 could bring economic changes with the potential to hit millions of people’s wallets in different ways.
A series of stock market gains have fueled retirement investments at the same time that catastrophic storm damage is causing steep repair costs and making thousands of homes virtually uninsurable. Meanwhile, the incoming Trump administration is eyeing deeper tax cuts along with a rollback of newly built guardrails around consumer finance.
While uncertainty abounds in the year ahead, “people can empower themselves the most by focusing on what they can control — those things that will be valuable regardless of what happens in the world,” said Kevin Mahoney, founder of Illumint, a Washington, D.C.-based financial planning firm.
Here are a few ways to put yourself in the best financial position for whatever the next 12 months may bring.
Hunt for high returns as interest rates fall
Interest rates are coming down, and the impact should be felt more widely in the months ahead by anyone with a savings account, mortgage, credit card or car loan. For many borrowers, that will bring a bit more relief from the nosebleed-level costs of carrying debt. But for many savers, it means less generous returns.
High-yield savings accounts are still topping out around 4.5%, beating the 2.7% annual inflation rate as of November. But as banks trim the interest payments they make to depositors, it’s important to make sure yours remain competitive, said Malik Lee, managing principal at Felton and Peel Wealth Management, an Atlanta-based firm.
“It’s one of the red flags that I’ve been warning clients of all the money market accounts,” said Lee, referring to a popular type of deposit account that limits debit transactions but is often high-yielding. “You’re sitting there thinking, ‘Hey, I’m getting 4 or 5% on this thing, because that’s where it initially was when rates were high, and now I’m getting 3%.”
While banks usually alert customers of rate changes, those notifications can lag and some account holders might not have them switched on. Earlier this year a Bankrate survey found about two-thirds Americans were earning suboptimal interest on their savings accounts.
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