Financial Highlights of 2025

 

My one-person company, Money Talk (read: me), may be the only entity in the U.S. that does a generally focused “deep dive” annual summary of personal finance research, events, and trends. I recently presented a webinar for the Association for Financial Counseling and Planning Education (AFCPE).

Why look back on the past year? For context and insights about how to manage money during the year ahead. Below are ten data points that caught my attention during 2025:

Affordability Crisis- This was a key theme throughout the year as prices for many consumer “basics” rose faster than household incomes. Examples include food, utilities, property insurance, new and used vehicles, and housing.

Inflation Trends- The Consumer Price Index (CPI) announced in January was 3.0%. It decreased for three months (February-April) and then increased for five months (May- September). The CPI for the change in prices from November 2024 to November 2025, announced in December, was 2.7%.

Interest Rates- The Federal Reserve Open Market Committee (FOMC) held interest rates steady for the 5^th consecutive time in July at a range from 4.25 to 4.5%. This was followed by three quarter point decreases in September, October, and December to a range from 3.50% to 3.75%.

Credit and Debt- Outstanding credit card balances increased to an all-time high and there was a record-high percentage of credit cardholders making minimum payments. Another first was credit cards with rewards payable in bitcoin.

Vehicle Purchases- By Q2, seven-year car loans comprised 21.6% of new vehicle financing and six-year loans, the most common loan type, 36.15%. For the first time ever, the average price of a new vehicle topped $50,000.

Homeownership- Mortgage interest rates decreased slowly from over 7% in January to about 6.2% in November. Home prices hit a record high in June and started to decline. A typical first time home buyer is 40 years old and there was an upsurge in the use of adjustable rate mortgages.

Stock Investing- The closing price of the Dow Jones Industrial Average (DJIA) on 12/31/24 was $42,544.22. This was followed by a market correction during the winter months and numerous fresh highs, especially in November and December after interest rate cuts. Closing DJIA on 12/31/25: 48,063.29.

Income Taxes- The IRS ended its experimental Direct file program as well as the ability to buy paper-I-bonds with a tax refund. The OBBBA mega bill made tax rates and tax brackets from the 2017 Tax Cuts and Jobs Act permanent and introduced several “limited time offers” through 2028.

K-Shaped Economy- Wealthy Americans boosted the economy. The top 10% of U.S. earners accounted for almost half of all spending while low- and moderate-income households struggled to make ends meet. Shopping at thrift stores increased as did smaller package sizes of food and other items.

Legislative Changes- Two impactful new laws were the Social Security Fairness Act, which repealed the Windfall Elimination Provision and Government Pension Offset. Another was OBBBA. 2025 also ended with 30 states mandating a personal finance course for high school graduation.

For additional information about 2025 events, click here for the slide deck for my recent webinar.

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.

 

 

My Key Takeaways from #AFCPE2025

I recently attended the 2025 Association for Financial Planning and Counseling Education (AFCPE) Symposium in Glendale, AZ.

Below are nuggets from sessions that I participated in:

 

Financial Health and Capability- There was a sharp decline in 2024 in Americans’ ability to make ends meet. The decrease was mainly driven by middle and upper income households. Not surprisingly, there was an improvement in knowledge about inflation, especially among younger adults. Less than half (46%) of U.S. adults have three months of expenses saved for emergencies.

 

Financial Conversations- Keynote speaker Riaz Meghji noted that “We are one conversation away from a different life.” In other words, interpersonal connections matter. He challenged attendees to recall a defining conversation that changed their life and to remember that if they say “yes” to something that costs money or time, they are also saying “no” to alternative options.

 

Hyperbolic Discounting- This is a cognitive shortcut (bias) where people attach more value to the present than the future, prefer smaller rewards now vs. a larger reward later, and tend to be impulsive. Hyperbolic discounting makes the future “feel cheaper” than it is and can be mitigated with precommitment strategies, goal partitioning, choice architecture, and future self exercises.

 

AI and Tax Preparation- A study of the use of ChatGPT in preparing income taxes was presented. Bottom line: it worked well for a very simple case but provided faulty responses with more complex situations. AI operators must tell AI to evaluate their eligibility for tax deductions and credits. When mistakes are caught and noted in follow-up prompts, AI output gets better.

 

Theory of Planned Behavior- This theory states that, when people have an intention to complete a task, action is more likely to take place. Research findings were presented that showed a positive relationship between attitude toward estate planning and intention to prepare an estate plan. An estimated $84 trillion of wealth is expected to be transferred by 2045.

 

Financial Cost of Dementia- 7.2 million Americans live with Alzheimer’s disease and the lifetime risk at age 45 is 20% of women and 10% of men. Financial mismanagement is an early indicator of cognitive decline (e.g., missed payments, double payments, spending extravagantly). AARP has a “dementia hub” with resources about interacting with people with dementia.

 

Financial Trauma- Financial trauma is any instance, observed or experienced, that has a negative impact on the way someone views, interacts with, or believes about money. Sources include generational influences, poverty, and systemic factors. Trauma is not a personal issue, but a societal one. No one makes bad financial decisions. They do the best that they can in the moment.

 

Grief to Growth- Widowed individuals each grieve in their own way. While there is no timetable for the grieving process, a speaker on a panel suggested grouping follow-up tasks following a death into three categories: Now (e.g., notifying Social Security), Soon (e.g., reviewing financial documents), and Later (e.g., making big decisions like selling assets and moving).

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.

Take-Aways From AFCPE Symposium Recordings

 

One of the great features of the annual Association for Financial Counseling and Planning Education (AFCPE) Symposium is that AFCPE records all of the breakout sessions and makes them available to attendees online for a year. Gone are the days when you needed to choose one session from among multiple topics of interest and miss hearing the others.

During the past nine months, when I had time, I slowly made my way through parts of the 2024 Symposium that I missed and was interested in. This post provides a very eclectic summary of my key take-aways from the “rest of the AFCPE Symposium.”

Sequence of Returns- This term refers to the order of investment returns in retirement. In other words, good years first/bad years last or bad years first/good years last. It is not the average return throughout retirement that matters but, rather, the order in which returns arrive.

Sequence of Returns Risk- This is the danger that poor investment returns early in retirement, combined with withdrawals for living expenses, will reduce a portfolio’s value, increasing the risk of running out of money sooner, even if average returns are acceptable. Most sequence of returns risk happens during the first half of retirement.

Buffer Assets- These are assets outside retirement accounts that can pay expenses during market downturns to shield retirees from having to make withdrawals from equity assets. Examples include high-yield savings accounts and money market funds, home equity lines of credit (HELOCS), cash value life insurance, and reverse mortgages.

Financial Education Courses- The “gold standard” for high school financial education is at least a full semester stand-alone course and, in 2023, eight states passed a financial education requirement. As of July 2025, 29 states guarantee a personal finance course. Most state mandates are unfunded. Why the momentum? Great advocacy work, organizational support, and research findings showing the effectiveness of, and positive impacts from, financial education.

The American Dream- Research findings show the term “American Dream” is highly individualized  but perceived by most people as owning a home, having a comfortable retirement, and an expectation that your children will have a better life than you. White, Asian, and higher-income Americans are more likely than others to say they achieved the American Dream.

Reinventing Yourself- A panel of speakers discussed the process of transitioning to a new career within the financial education and counseling space. The benefit of doing this is that “you know things” and can transfer knowledge and skills honed during a prior career. In other words, you don’t have to start at the bottom. Some people also get paid more when they switch careers. A key to success is trying to differentiate yourself through skills, credentials, and experiences.

Next month, I look forward to attending the 2025 AFCPE Symposium. I’ll be teaching a concurrent session myself and once again learning from, and networking with, professional colleagues and sharing best practices in financial education.

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.

 

AFCPE 2024: Ten Take-Aways and a Barbservation

I recently returned home from the 2024 Symposium of my professional “home,” the Association for Financial Counseling and Planning Education® or AFCPE®. This conference serves an amazing mix of researchers, practitioners, and educators whose work positively impacts the financial wellness of U.S. families. 

Below are my key take-aways from #AFCPE2024 and a Barbservation:

 

Motivational Techniques- These approaches can be used for positive changes or for fraud. Reciprocity is where you get something (e.g., a free meal) and feel pressure to return the favor. Social proof is when you are told about others who have done something that you are being asked to do. In addition, people who agree to small things are often asked to agree to something bigger. Fraudsters keep getting better at developing strategies that nudge consumers to part with their money.

 

Student Loans- The Saving on Valuable Education (SAVE) program that replaced a program called REPAYE is frozen with no new enrollments as a result of a court injunction. Borrowers were placed in an interest-free forbearance. Lawsuits were brought against SAVE because it costs a lot of money to forgive debt and this was not approved by Congress. Public Service Loan Forgiveness (PSLF) was approved by Congress but could always be undone in the future.

 

Fraud and Scams- Classic strategies (e.g., “pump and dump”) are being used with modern technologies to reach victims with pitches that prey on emotions (e.g., greed, fear, and fear of missing out or FOMO). Scarcity (“this product is only open to the first 100 investors”) is another common ploy. Everyone, regardless of education, can be a fraud victim during a moment of vulnerability.

 

High-Income Households- AFCPE members were advised not to ignore this demographic as more than half of Americans earning $100,000+ a year live paycheck-to-paycheck. Financial challenges of high-income households include lifestyle inflation, social pressure, family and community obligations, over-leveraging debt, and complex financial planning needs.

 

Gig Workers- This term includes freelancers and self-employed individuals. There are about 63 million U.S. gig workers in 2024 or 38% of the total workforce. One in five makes six figures. Gig workers should avoid comingling personal and business expenses, set aside money for taxes, and track jobs that provide 1099 forms for income reporting so they know if they are missing any 1099s at tax time. Hallmarks of a maturing business include registration with a state Secretary of State, a business bank account, good credit, 3-6 months of bank statements, and a business plan.

 

Financial Abuse- Abusive relationships often develop gradually and the key driver is control.  Indicators of economic abuse include: threatening harm, controlling or sabotaging a victim’s work, and limiting a victim’s future career growth (e.g., taking classes). The reason that people stay in abusive relationships is often similar to those who don’t heed warnings to evacuate during storms: they don’t know where to go and/or lack the ability to move pets and possessions.

Artificial Intelligence (AI)- The better an AI prompt, the more useful the output. Positive uses of AI in financial education include automated financial advisors, fraud detection, personalized financial products, and the creation of quizzes, discussion questions, rubrics, and templates. Negative aspects of AI include privacy invasion, biased decision-making, authoritative erroneous output called hallucinations, over-reliance on automation, and erosion of skills.

 

Veterans Benefits- VA benefits are all about Veterans- not their spouse or children. Debunked myths included “My VA disability benefit will continue for my spouse after my death,” “I will be able to go to a VA long-term facility,” and “I get free life insurance from the VA.” The VA will pay up to $2,000 toward burial expenses for a service-connected death and up to $978 for a non-service connected death. This is not automatic, however, and government paperwork is required.

 

Financial Well-Being- Becoming financially secure is hard and many people feel like they should be doing better. Shame is common as evidenced by a majority of engaged couples who do not disclose debt to each other. Achieving financial well-being is a behavioral problem, not a knowledge problem. Symposium attendees were advised to consider taking a periodic "financial health day” to focus on finances and to encourage their clients to do the same. 

 

Powerful Presentations- Presentations about personal finance (or any other topic) should have a strong opening with a statistic, quote, story, demonstration, or question. Likewise, the end of a presentation should be equally strong with a call to action. In other words, So What? Now What? How can audience members apply the presentation content to their life or work?

 

I close with a personal Barbservation.

 

In informal conversations with dozens of attendees and in some questions asked of speakers, there was a strong undercurrent of worry, anxiety, concern, and/or dread about the incoming administration and potential federal agency leadership appointees. The Symposium attracts a number of government employees (e.g., Securities and Exchange Commission (SEC), Consumer Financial Protection Bureau (CFPB), U.S. Department of Defense, U.S. Department of Agriculture, and U.S. Department of Veterans Affairs) as well as financial education entrepreneurs like me (full disclosure) who work on federally-funded projects.

 

Yes, people are worried about the potential loss of their government-funded jobs but equally as important, the loss of the valuable services that their agencies provide to ordinary Americans. Below are some examples.

 

Will billionaire cost cutters understand, or care about, the financial education and counseling services that Personal Financial Managers (PFMs) provide to service members on military installations worldwide? 

Or the valuable professional development training that OneOp provides for military service providers? 

Or the financial education delivered by Cooperative Extension educators who help individuals and families across the U.S. improve their financial well-being? 

Or the preventive financial education and regulatory enforcement programs provided by the SEC and CFPB that help combat fraud?  

I certainly do hope so, but recent news headlines have me feeling uneasy and apprehensive too.

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.

 

 

Take-Aways from #AFCPE2023- Part II

 

As I noted last week, I slowly made my way since last December through over a dozen video recordings of presentations made at the 2023 Association for Financial Counseling and Planning Education (AFCPE) Symposium.

Below is another very eclectic summary of key take-aways from recorded presentations on topics of personal interest:

 

Debt Repayment Acceleration- The best way to pay off debt quickly is a “rollover method” where extra payments on debt get shifted from one creditor to another as debts are repaid. The free Utah State University PowerPay program is a great resource to create a debt reduction calendar. There are four PowerPay payoff methods to apply extra payments to: highest interest rate first, shortest term first, lowest balance first, and in the order that debts are entered.

 

Estate Planning- About 60% of the U.S. population dies without a will. In that case, state-specific intestacy laws apply. One reason for a lack of wills is that people come to a standstill over who to name as a guardian for minor children. If a guardian or executor does not want to serve, they can decline at the outset or in the middle of estate administration. Step-children are not considered children unless the creator of a will defines them as such.

 

Insolvent Estates- This is where a deceased person’s debts exceed their assets (i.e., a negative net worth). Every state has a law that states “here’s who gets paid first” (e.g., 1. Attorney, 2. Payor of funeral expenses, 3. Executor, 4. Taxes, 5. Medicaid, 6. Recent medical bills, and 7. Everybody else (credit cards, old medical debt, loans, etc.). In estates with limited assets, entities on the bottom, like credit cards, don’t get paid and there is no money for heirs.

 

Scams- Experts estimate that only 15% of scams are actually reported. Fraud is rampant and some businesses, with the same structure as legitimate corporations, actually exist solely to perpetuate scams. Scammers collects bits of information about people, put it together, and compile in within data bases to be used for fraudulent transactions. Scammers know how the human brain works and how to put people in a state of fear or greed and apply time pressure.

 

Professional Uses of AI- The session began with a quote (“If you don’t like change, you’ll like irrelevance even less) and noted that AI is already part of our lives. Think virtual assistants like Siri and Alexa and autofill in Microsoft Word). Professionals should not use generative AI platforms like ChatGPT unless they have expertise to verify the accuracy of the output and AI output should always be considered a first draft. AI prompts need to be very specific, such as including a word count and level of understanding (e.g., “explain ChatGPT to a 10-year old”).

 

Cryptocurrency- Almost a third of investors, especially young adults, own cryptocurrency. Disadvantages include the following: 1. Use for illegal activities and scams, 2. Fees can be expensive, 3. Regulatory risk (it is possible that countries could outlaw its use), 4. Price volatility (there have been bubbles resulting in big losses), 5. Security risk (crypto miners could be hacked), and 6. No government (e.g., FDIC or SIPC in the U.S.) protection.

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.

Take-Aways from #AFCPE2023- Part I

 

One of the great features of the annual Association for Financial Counseling and Planning Education (AFCPE) Symposium is that AFCPE now makes video recordings of all of the breakout sessions and makes them available to attendees for a year. Gone are the days when you need to choose one session from among three topics of interest and miss the other two.

 

During the past eight months, I have slowly made my way through parts of the 2023 Symposium that I missed and was interested in, including a general session about poverty in America when my flight was abruptly moved up (without my consent) and I had to leave early. In this post and the next, I will provide a very eclectic summary of my key take-aways from the “rest of the Symposium”:

 

Poverty in America- One in nine (38 million) Americans live below the poverty line and one in eighteen live in “deep poverty.” Key reasons why poverty persists are the job market and housing market, which is brutal for poor people. Also, the U.S. does a poor job of connecting people to programs they need and it subsidizes affluence instead of poverty. Example: The amount provided by mortgage interest deductions is three times that of housing subsidies.

 

Veterans Benefits- Many military Veterans do not receive benefits earned for service to our country. The three top reasons why disability claims are denied by the Department of Veterans Affairs (VA) are: 1. Not enough supporting medical evidence, 2. Failure to attend a scheduled medical exam, and 3. A disability is not connected to military service. No taxes are owed on VA disability compensation and Veterans can receive both VA and Social Security disability.

 

Financial Education- “Just in time” financial education that is tied to an upcoming decision or event is more effective than generic interventions. Other principles of effective financial education are 1. Knowing the target audience receiving services, 2. Providing actionable, relevant, and timely information, 3. Building on learners’ motivation, and 4. Making it easy for people to make good decisions and follow through on information and skills that they learn.

 

Family Caregivers- Caregiving can happen suddenly and caregivers can be caught off guard both emotionally and financially. Many caregivers have no idea what to expect and there are not a lot of institutional supports. Family caregivers spend, on average, $7,000 annually out of pocket. Additional opportunity costs include decreased work hours, passed up promotions, or leaving a job completely. One study estimated $304,000 in lost lifetime wages and benefits.

 

Financial Fraud- The top scam category in 2022 was imposter scams. Financial scam impacts are both financial and non-financial (e.g., PTSD, anxiety, depression). Scams often capitalize on unverifiable information and pressure people to make quick decisions. Protective factors against scams include prior experience with scams (experience is a great teacher), knowledge of scam methods (a benefit of financial education!) and bouncing ideas off of others for feedback. Social isolation, on the other hand, increases people’s vulnerability for fraud.

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.

 

My Ten Key Take-Aways From the 2022 AFCPE Symposium

Attendees at the same professional conference have different take aways depending on their lifestyle, job responsibilities, subject matter knowledge/skill set, and other personal characteristics. We all filter new information through these lenses. When information comes at a “teachable moment,” interest in, and attention to, a presentation dramatically increases.

Below are my ten key take-aways from the 2022 AFCPE Symposium:

 

AFC Certification Milestone- The AFCPE accredited financial counselor (AFC®) certification began in 1992 and celebrated its 30^th anniversary. There are 3,000 AFCs and 1,600 candidates and the AFC® (along with the CFP®) is one of only 10 accredited professional designations in a personal finance space with about 200 certification acronyms. A job analysis is conducted every five years to make sure the AFC® is in synch with the work of real life financial practitioners.

 

Financial Atomic Habits- Self-improvement is like compound interest…it grows over time. Never underestimate the power of small, daily improvements and try to get 1% better every day. Goals provide direction and must be achieved to succeed. Habits, on the other hand, are skill-based and focus on processes; i.e., systems that move people forward. The four stages of a habit are cue, craving, response, and reward. Habit stacking ties a new habit to an existing one.

 

Women and Money- The documentary film, Savvy, by director Robin Hauser and her follow-up discussion provided a powerful look at the state of women’s finances. There is disturbing evidence that young women are abdicating financial decisions to others and, when investing, are not necessarily understanding it. Also, women recover more slowly from divorce than men do. Hauser stated that all women need to keep on top of their finances and have a way to earn money.

 

Financial Podcasts- A team of Cooperative Extension educators shared their podcasting experiences. Not surprisingly, their listenership metrics improved following podcast promotional efforts. They also recommended using fun and flashy titles to attract listeners. An example given was “I’ve Got the Power” for a podcast about the use of powers of attorney in estate planning. Resources and additional information beyond broadcast content can be shared in podcast show notes.

 

Social Media Practices- A participant in a networking chat recommended concentrating on three social media platforms and using them well. This includes frequently posting content that is valuable to others. Video presentations can be especially effective in financial education. People want to physically see things being done rather than having them explained (e.g., budgeting by allocating money to different expense categories). It makes them think “I can do this too.”

 

Bias and Stereotypes- If you have a brain, you have biases. Nobody escapes them and there can be a fine line between stereotyping and dehumanizing others. It is much easier to reduce stereotypes when you have personal connections with a diverse group of people. Also, if you have a proactive strategy to mitigate biases, you can use your conscious mind to overcome your unconscious mind so you slow down and think about a situation.

 

National Financial Capability Study- Results of the 2021 NFCS were compared with earlier waves of this triennial study. There was a decrease in financial knowledge, compared to the first (2009) wave, and higher financial knowledge was associated with increased financial capability. Like earlier NFCS waves, there were disparities among subgroups. There was also evidence that younger investors were more likely to invest in complex investment products (e.g., options, margin trades, and cryptocurrency) than older investors, but there is a disconnect between their actions and knowledge.

 

Success Traits- Keynote speaker Ryan Law stated that change is hard because people need to create new pathways in their brain, The place to start is to write down a change you want to make; i.e., begin with the end in mind. Five steps to be successful are 1. Get specific (define what success will look like), 2. Identify a strong “why” for making a change, 3. Take tiny steps (so you think “I can do this”), 4. Use implementation intentions, and 5. Use support and tracking data. A good analogy for change is hammering away at a rock. As a result of many incisions over time, it will eventually break.

 

Useful Tidbits- Three other content nuggets stood out: 1. Some students take out loans for more than they need to provide money to give back to their family, 2. For every negative interaction with someone, it takes five positive interactions to counteract it, and 3. Change and opportunity both happen in life; it is what people do with both of these challenges that counts. This advice for practitioners also stood out: “meet people (clients) where they are, but don’t leave them there.”

 

My Most Teachable Moment- The most impactful session for me was “Are Your Clients Leaving Cash on the Table?” about maximizing VA benefit compensation. At the same exact time of the workshop, my husband (who has left a lot on the table) was accessing VA benefits for the first time in the 50 years since his military discharge. After decades of using my work-based benefits, he contacted the VA to get hearing aids. It was very interesting to learn about Veteran Service Officers or VSOs that help VA benefit claimants, disability ratings, and that “many scars from service are not visible.”

 

Those are my ten key take-aways from #afcpe2022. What are yours? Let’s keep the summary conversation going.

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.

 

 

My Key Take-Aways From #AFCPE2021

Last week, I attended the virtual 2021 AFCPE (Association for Financial Counseling and Planning Education) Symposium for financial educators, planners, counselors, coaches, researchers, and content creators worldwide.

Below are seven of my key take-aways about personal finance content and tips for professional practice:

Justice-Involved Populations

 

Studies have found an association between incarceration and reduced financial well-being. Ex-offenders are twice as likely as others to use check cashers, payday loans, and pawnshop loans and 35% earn less than $25,000 annually. 

Two of the biggest banking issues that this population deals with are lack of a valid ID to open a bank account and mismanagement of previous bank accounts. People going to jail were advised to freeze their credit to deter identity theft and to have a trusted power of attorney to sign documents on their behalf.

 

Over-Shopping Trends

 

Pre-COVID, about 6% to 10% of Americans were considered over-shoppers. The pandemic added a “perfect storm” of boredom, “rehearsed lives” on social media leading to FOMO (fear of missing out), and increased online purchasing. Consequences include debt, destroyed relationships, wasted time, and diminished social lives. 

When people over-shop, there is an emotional reason behind it. They may be motivated to change when they see the annual cost of “small” purchases and when they identify healthy alternatives to shopping (e.g., physical activity). The widely studied six-question Richmond Compulsive Buying Scale is a useful self-assessment tool.

 

Financial Psychology

 

Outcomes in life are a result of money behaviors. “Money Scripts” are messages about the use of money that are handed down from others. People also experience “Financial Flashpoints,” which are major events in their lives that leave a big impression. Examples include growing up poor and a scarcity mindset, growing up wealthy, and divorce. 

Financial behaviors often make perfect sense when someone understands the money scripts that drive them. A tip to increase savings is to name your savings accounts for a specific purpose.

 

Tax Concerns

 

A networking discussion about income taxes included concern that some people who received the advance child tax credit (ACTC) will owe taxes in April 2022 and, in some cases, ACTC payments went to the “wrong” parent in divorced couples that alternate tax credits. 

Other issues raised were short-term capital gains/losses for day traders, new reporting requirements for cryptocurrency brokers, and the fact that the penalty for not filing an income tax return is 10 times higher than the penalty for not paying taxes owed. The IRS has payment programs for delinquent filers.

 

Financial Infidelity

 

Financial infidelity is deceptions about money in close relationships such as a spouse/partner or parent/child. “Red flags” include hiding savings accounts, hiding debt, hiding purchases in the trunk of a car until a spouse leaves the house, and “me” and “mine” language in financial counseling sessions. 

An increasing trend, especially among young adults, is for couples to agree on who pays for what but not share money in joint accounts. Couples need to develop a money management process that works for both individuals.

 

Retirement Planning

 

In another networking discussion, concerns of older adults included health care costs, inflation, long-term care, keeping busy, and outliving savings. On the other side of the age spectrum, some older Gen Zers (age 9-24 in 2021) express “climate doom” concerns. It is hard to motivate them to save when they do not see themselves (or the planet) being around in 50 years. 

Concerns about the long-term future of Social Security are also common. The best way to start planning for retirement is to start where you are with what you have.

 

Savings Behavior

 

Small steps, such as saving $100 per month or 4% of each paycheck, add up over time. A study by Saver Life, a program for people with low and moderate incomes, found that even $100 of savings can have a huge impact: greater likelihood of financial satisfaction, less high-cost borrowing, and better ability to keep utilities on. 

COVID-19 stimulus payments not only provided immediate relief to millions of American families, but they also helped many create a savings buffer against future emergencies.

 

Starting with Thanksgiving day and lasting through the start of the new year, my best wishes for a happy and healthy holiday season.