Welcome 2025: A Year of Financial Empowerment
How Should You BE Budgeting in 2025?
Kicking off 2025, let's delve into what the financial experts are saying about budgeting and personal financing in 2025, based on "How Should You Be Budgeting in 2025?", published on Investopedia by Elizabeth Guevara.
A New Year, A New Budget
Certified Financial Planner Nicky Amore advises us to plan for potential increases in essential expenses such as groceries, utilities, and healthcare. Including a 3%-5% buffer in your 2025 budget could be a smart move to ensure you're ready for any unexpected costs.
Planning for changes or opportunities in tax laws, ensuring you’re on track with your financial targets, and reviewing your current contributions to tax-advantaged accounts like 401(k)s, HSAs, or IRAs can put you in the best position for a prosperous 2025.
Federal Reserve Rate Cuts and Your Finances
The Federal Reserve is expected to continue interest rate cuts this year. According to Chad Olivier, another certified financial planner, these cuts could lower borrowing costs for mortgages, car loans, and business financing but might also reduce the interest on savings accounts and fixed-income investments. If you're planning to refinance your debt or make substantial purchases, 2025 might be a good time.
However, it's important to remember that a cut in Federal rates is not directly correlated with a drop in mortgage rates, so don't put your homeownership dreams on hold waiting for the perfect moment.
A New Administration, A New Outlook?
The new administration's fiscal policies could significantly impact the economy and personal finances. While there are concerns about potential tariffs, the new administration's tenure is also sparking economic optimism, leading to increased job opportunities. This could be an excellent time to evaluate your career progression and income potential.
Notwithstanding, it's safe to keep your emergency fund well-stocked to weather any unexpected financial storms.
What's in Store for Savers?
Interest rate cuts could impact the returns on CDs, money markets, and savings accounts. If you're a saver, it might be time to explore alternatives like Treasury securities to maintain returns in a lower-rate environment.
Investopedia recommends an emergency fund worth three to six months’ worth of living expenses - a sound advice worth considering!
We hope these insights help you shape your financial strategies and decisions in 2025. As your preferred lender, we remain committed to helping you achieve your homeownership dreams. Thanks for your trust and partnership!
|
