My one-person company, Money Talk (read: me), may be the only entity in the U.S. that does a “deep dive” summary for clients of each year’s personal finance research, events, and trends. I recently presented a 90-minute 2024 Personal Finance Year in Review webinar for OneOp and wrote a blog post about 2024 financial milestones for 403bwise.
Why look back on the past year? For insights about how to manage money during the year ahead. Below are ten data points that caught my attention during 2024:
SHED Study- The 2024 Federal Reserve Survey of Household Economics and Decision-making (SHED) study found that 63% of adults could cover a $400 emergency with cash. Conversely, 37% of survey respondents could not. Not surprisingly, inflation was reported as the top financial concern.
Value of Financial Education- A study by Tyton Partners and Next Gen Personal Finance calculated a lifetime benefit of about $100,000 per student as a result of taking a one-semester course in personal finance. Impacts resulted from avoiding high-cost debt and larger retirement savings.
Retirement Planning and Longevity- Healthview Services issued a white paper cautioning consumers and financial advisors not to automatically assume a life expectancy of age 95 in retirement savings calculations and to consider health status and chronic diseases as key variables.
Inflation- The Consumer Price Index (CPI), which measures price changes over a 12-month period (e.g., November 2023 to November 2024), was “sticky” in 2024. The CPI was 3.1% in January and 2.7% in November. At two points during the year, the CPI trended upward after previously declining.
Interest Rates- There were three Federal Reserve interest rate cuts during 2024 totaling 1% bringing the federal funds rate to a range between 4.25% and 4.5%. Consumers were impacted as borrowers (e.g., lower interest on credit cards) and as savers (e.g., lower interest on money market funds).
Credit Cards- Annual percentage rates (APRs) on bankcards hovered around 20% during 2024 and the average APR on retail credit cards was over 30%. One reason: record high margins charged by credit card issuers above the prime rate or other metrics that variable rate credit cards are tied to.
Housing- “Rate lock gridlock” continued during 2024 with an estimated 60% of homeowners having mortgage interest rates below 4% and unwilling to sell their homes, which would require them to have a higher rate mortgage. Home affordability fell to low levels not seen since the 1980s.
Savings- The U.S. personal savings rate declined throughout the year from 5.5% in January to 4.4% in November. In addition, banks started to pay lower annual percentage yields (APYs) on savings accounts after the Federal Reserve started cutting interest rates.
Investing- Both the stock market and cryptocurrency (e.g., bitcoin) had noteworthy gains in 2024 but also major price pullbacks. In short, volatility was the name of the game. Major stock market indices all reached fresh highs (e.g., the DJIA started at 37,715 and crossed 45,000 before retreating).
Taxes- Final regulations for required minimum distributions by non-spouse beneficiaries of tax-deferred plans were finalized and the IRS processed tax returns through its new Direct File program.
What’s next for 2025? Time will tell. Best wishes for happiness, success, and financial well-being.
This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.
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