At the start of each year, it is crucial to revisit essential financial housekeeping tasks, familiarize yourself with new tax regulations, and examine current forecasts for interest rates and other economic indicators. Whether your New Year’s resolutions revolve around personal finance or not, January serves as an opportune time to evaluate your financial landscape and make necessary adjustments. This proactive approach not only helps in achieving your financial goals but also ensures that you stay informed about changes that could impact your financial well-being throughout the year.

Here are some essential insights and considerations for 2025 to enhance your financial planning:

1. Updates on Student Loan Forgiveness: Recently, President Biden has taken significant steps towards student loan forgiveness, with the cancellation of federal student loans for an additional 55,000 individuals through the Public Service Loan Forgiveness (PSLF) program, as reported by CBS News. This action raises the total amount of canceled federal student loans under his administration to an impressive $180 billion, positively affecting approximately 4.9 million Americans. However, the outlook for 2025 appears uncertain, with concerns about the future of the new Saving For a Valuable Education (SAVE) repayment plan. The PSLF program’s stability also seems questionable, especially if there are moves to dissolve the Department of Education, which experts suggest is a significant uncertainty.

For those considering private student loans, U.S. News & World Report has compiled a list of the best options for 2025, highlighting Ernest as their top choice. However, they emphasize the importance of first applying for federal financial aid before exploring private loan options.

2. Anticipated Mortgage Rates for 2025: In 2024, mortgage rates remained stubbornly elevated despite cuts by the Federal Reserve, with 30-year fixed rates hovering well above 6% for most of the year. According to CNBC, 2025 is expected to bring continued challenges, with forecasts suggesting rates between 6.4% and 6.6% from various sources like the Mortgage Bankers Association and Fannie Mae. Homebuyers should remain cautious and be prepared for fluctuating rates that could impact their purchasing power.

3. Housing Market Trends to Watch: Realtor.com has indicated that the sluggish pace of home sales, particularly in December 2024—the slowest December since 2019—has been largely attributed to higher mortgage rates. Inventory saw a drop of 8.6% from November. However, Realtor.com’s economists project a modest increase of 1.5% in home sales for 2025, suggesting a possible shift in market dynamics. ABC News has also reported on the ongoing mismatch between supply and demand, which could lead to frustrations for potential buyers. Yet, there is a slight hope that home prices may decrease marginally. Additionally, NBC News referenced Redfin, indicating that with an increase in rental inventory, the national median asking rent price is likely to stabilize throughout 2025.

4. Updates on CD Rates: According to NerdWallet, CD rates are not expected to rise in 2025. Both national average and high-yield CD rates have seen a notable decline, particularly during the latter half of 2024, coinciding with the Federal Reserve’s decision to lower its federal funds rate. This trend could impact your savings strategy, so it’s advisable to stay informed about potential rate changes that could affect your financial plans.

5. Current Status of Series I Savings Bonds: The interest rate for Series I savings bonds currently stands at 3.11%, which includes a fixed rate of 1.20%. This rate applies to bonds issued between November 1, 2024, and April 30, 2025. For those unfamiliar, Series I bonds accrue interest monthly, with interest compounded semiannually. They offer both a fixed rate of return and an inflation-adjusted rate, making them an attractive option for long-term savers. Investors can redeem their I bonds after a year, but be mindful that cashing them in before five years means forgoing the last three months of interest.

Essential Personal Finance Tasks to Complete Immediately in the New Year

1. Adjust Your 401(k) Contributions: For 2025, the IRS has raised the limit on contributions to 401(k), 403(b), and most 457 plans, as well as the federal Thrift Savings Plan, to $23,500, an increase from $23,000 in 2024. For individuals aged 50 and older, the catch-up contribution limit remains $7,500. If you are regularly contributing from your paycheck, it’s vital to adjust your contribution amounts to ensure you maximize your 401(k) savings. Making this adjustment at the beginning of the year is advisable, as it allows you to set it and forget it, avoiding the need for mid-year changes that could hinder your ability to reach your financial goals.

related: where to save (when you don’t know what you’re saving for)

2. Reevaluate Your IRA Contribution Limits: The annual contribution limit to an IRA remains at $7,000 for 2025, while individuals aged 50 and older can still contribute an additional $1,000 as a catch-up. It’s essential to reassess your contributions and ensure you are maximizing this tax-advantaged account.

related: not sure what to do first/next in your personal finance journey? here’s our money roadmap

3. Reassess Your Debt Repayment Strategy: If your mortgage or private student loan payments have recently changed, consider rounding your payments up to an even number and allocating the extra amount toward the principal. This simple adjustment can have a profound impact on your overall debt reduction strategy. For instance, if your mortgage payment is now $3,218, you could pay an additional $282 each month, making your total payment $3,500.

• an extra $282 toward principal each month (total = $3,500 each month)
• an extra $82 toward principal each month (total = $3,300 each month)
• an extra $782 toward principal each month (total = $4,000 each month)
• or an extra $32 toward principal each month (total = $3,250 each month)

4. If You Have a 529 Plan, Reassess Your Contributions: Review your automatic contributions to your 529 plan, as states periodically adjust the maximum contribution amounts eligible for state income tax deductions. If you aim to maximize your contributions, this is an excellent opportunity to evaluate your current strategy. Notably, starting January 1, 2024, you can roll over unused 529 funds into a Roth IRA for your child without incurring tax penalties, providing a flexible option for future financial planning. Saving for College provides comprehensive details on this.

related: the 411 on using 529s to go back to school

5. Conduct a Subscription Review: Take the time to assess your subscriptions and recurring payments to eliminate any services you may no longer be using. This review is crucial, especially as subscription prices continue to rise—YouTube TV, for instance, has increased its rates to $82.99 per month, a significant jump from its initial launch price of $35. By identifying and canceling unnecessary subscriptions, you can free up funds for more critical financial goals.

6. Automate Your Financial Management: Explore the benefits of setting up automatic investing or saving plans to help manage larger expenses efficiently. For example, Kat has implemented a system where a small amount of money is automatically transferred from her checking account to various online savings accounts dedicated to different financial goals, including her emergency fund and vacation savings. This strategy not only simplifies her financial management but also ensures consistent progress towards her objectives.

What personal finance tasks would YOU prioritize immediately in the new year, readers? What steps have you already taken this year, and how has this list motivated you to act?

related: what was the best financial decision you made last year? (2018 discussion)

Stock photo via 123rf.com/serezniy