Financial Wellness in 2025: Trends, Tips, and Opportunities
As the economy enters 2025 on a relatively strong footing, now is an excellent time to reassess and improve your financial situation. With low unemployment, modest inflation, and declining interest rates, the stage is set for a fresh start.
Emergency Savings: A Top Priority
New Year’s resolutions often focus on building up emergency funds, and for good reason. A staggering 72% of respondents in a Fidelity Investments survey reported experiencing a significant financial setback in 2024, with nearly half dipping into their emergency funds to cover the costs. Having a cushion of liquid cash can provide peace of mind and protect against unexpected expenses.
Diversifying Your Emergency Fund
Consider holding your emergency fund in various forms, such as money-market mutual funds or laddered bank certificates of deposit. This approach allows you to earn a modest yield while maintaining easy access to your funds.
A New Rule to Help Hard-Pressed Consumers
The federal Consumer Financial Protection Bureau has introduced a new rule aimed at reducing overdraft fees at banks. This change could save households an average of $225 annually and is particularly beneficial for lower-income individuals who are disproportionately affected by these fees.
Tax Season Preparation
The IRS recommends taking several steps to get a head start on the 2024 tax filing season. Gather and organize your tax records, make estimated quarterly payments if required, and open an IRS Online Account. Additionally, be aware of changes to income brackets, deductions, and other tax aspects due to inflation adjustments.
Stock Market Outlook
The stock market is poised to finish 2024 with its second consecutive annual gain of over 20%, driven primarily by rising corporate profits. If you’re an investor, this trend bodes well for the coming year. Earnings growth is expected to accelerate in 2025, led by tech stocks and supported by trends like artificial intelligence and advanced computing.
Inflation and Spending Habits
Inflation remains a significant concern in 2025. To mitigate its impact, conduct a thorough review of your spending habits. Identify areas where you can cut back on unnecessary expenses, such as subscription services, insurance premiums, and other monthly or quarterly payments. By “auditing” your spending habits, you can make more intentional financial decisions and optimize your budget.
By staying informed about these trends and taking proactive steps to improve your financial situation, you can set yourself up for success in 2025.
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