The economy enters 2025 in reasonably good shape, with low unemployment, modest inflation, a trend toward lower interest rates and strong corporate earnings growth giving the stock market a boost.
Hence, it is not a bad backdrop to get a fresh start in improving your finances. Here are some trends, issues, and tips to consider in the coming weeks:
New Year’s Resolutions can provide the impetus to improve your financial situation in many ways, such as building your retirement plan, reviewing your insurance policies, or starting (or updating) an estate plan.
However, the decision most Americans are focused on before 2025 is more basic: shifting more money into emergency savings. You can hold money in various forms, from a money market mutual fund to graduated bank certificates of deposit (those that mature at intervals such as quarterly).
The idea is to have enough cash to cover large, unexpected expenses while generating at least a modest return in the meantime.
in Fidelity Investments surve72% of respondents said they had suffered a significant financial setback this year, with nearly half having to rely on their emergency funds to pay for it. Thus, it is not surprising that 79% of survey respondents hope to build their cash reserves, while 38% are concerned about unexpected expenses, and 20% say another surprise could set them back in 2025. Women, more than men, said they were not They have an emergency venture fund to invest in, but 80% of them decide to build one in 2025.
There’s a new rule that could help some of the most hard-pressed consumers Which charges lower overdraft fees at banks.
The federal Consumer Financial Protection Bureau in December issued a final rule that it said would reduce typical overdraft fees from $35 per transaction to $5, saving an average of $225 annually for the 23 million or so households that pay such fees.
Critics of the bank assert that the accusations have severely affected low-income people.
Overdraft fees are “a form of predatory lending that exacerbates wealth disparities and racial inequality,” Carla Sanchez 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 applaud the new rule but warn that it faces the risk of being overturned by Congress. They say this could be achieved by a simple majority in the Senate and House of Representatives, with limited debate.
The IRS suggests several steps that can be taken soon for people hoping to make a jump on the 2024 tax filing season. These include gathering and organizing tax records, making a quarterly estimated payment (if necessary) by January 15, 2025, and opening an IRS account online . Income brackets, deductions, and other tax aspects have changed slightly due to inflation adjustments.
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