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Preparing Your Finances for 2025

Reflect on financial events over the past year to help plan your finances in the coming year.

A young woman and child playing in the snow around a snowman.

As 2024 draws to a close, it’s a good time to look back at the year’s big financial events and consider how they might affect your money in the coming year. As you financially plan for 2025, take a moment to review the news of the past year and make informed decisions to move forward with confidence.

Falling Interest Rates

During 2024, the Federal Reserve Board began cutting interest rates for the first time in more than four years. According to the Fed’s economic projections, the Board anticipates additional interest rate cuts in 2025.

If interest rates continue to drop, you may want to consider money moves for a falling interest environment, such as:

  • Plan for additional savings opportunities. You may have predictable opportunities to save more money, such as when you receive an annual bonus, tax refund, or birthday gifts. Start planning now for how you can maximize those windfalls to save more for the future.

  • Pay down or refinance existing debt. Whether it’s a mortgage, auto loan, or credit card, if you have current debt at a high interest rate, 2025 may be a good time to consolidate it at a lower rate. For example, consider transferring a high-interest credit card balance to a new card with a zero interest promotional rate, or keep an eye on mortgage rates and determine how much you might save over time by refinancing to a lower rate.

Inflation Normalization

After a few years of elevated price increases, inflation cooled in 2024. The Federal Reserve Board forecasts that inflation will continue to normalize in 2025. However, forecasts may be adjusted based on new economic policies. To be prepared for whatever happens with inflation, consider taking these steps in 2025:

  • Build your emergency fund. A well-funded emergency account allows you to be prepared for market shifts or unexpected financial needs. Most experts recommend aiming to save enough to cover three to six months’ worth of expenses. A high-yield savings account can help you build your emergency fund even faster.

  • Revisit your monthly budget . Inflation may not continue to rise as quickly as it did a few years ago, but that doesn’t mean prices will decrease. It may be a good time to review your spending and look for ways to adjust your budget. For example, you may need to increase the amount allotted for certain items and look for other items where you can cut back.

  • Plan vacations in advance. Rather than waiting for potential price increases later in the year, consider booking 2025 vacations several months in advance. If prices drop before your trip, you may be able to rebook at the new price.

Major Weather Events

The past year was marked with major weather events including hurricanes, flooding, and record heat waves. Extreme weather events can create financial uncertainty and derail our daily lives. To be prepared for major weather events in your area, consider the following:

  • Review insurance policies. Make sure you have appropriate insurance for your home and belongings. Flood insurance is not included in standard homeowner’s insurance policies and is available through the National Flood Insurance Program. Consider researching your area rainfall forecasts and potential impact to your property to determine whether you may need additional coverage.

  • Secure your financial accounts. After a disaster, scammers often attempt to take advantage of survivors, according to FEMA. Make sure your accounts are protected with multi-factor authentication and biometric authentication if possible. Learn more about how Forbright Bank protects customers’ personal and financial information.

  • Create an emergency stash. Ahead of any major weather events, gather important documents such as personal identification and insurance policies, as well as some cash in case it’s needed. This will allow you to be prepared in the event of a weather disaster in case you are without access to banks, ATMs, or internet access.

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.

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