In a time of economic uncertainty marked by soaring prices and inflation, surveys show Americans are committed to being cautious with their finances in 2025.
Cautious is wise, and whether someone is aspiring to save more money, buy a car or a house or pay down student loans, they should start by assessing their income and spending, according to Ted Lyons, vice president of financial services for AAA Northeast.
Fidelity Investments 2025 Financial Resolutions Study revealed that Americans are anticipating a year of “living practically.” Nearly 65% were considering a financial resolution for 2025.
The leading financial resolutions have stayed the same over the past few years, the study noted: 43% of respondents want to save more money, 37% are aiming to pay down debt and 31% want to spend less money.
Findings from a survey by Statista also showed that saving more money and cutting spending are priorities for Americans in the new year. According to the results, 21% of respondents resolved to save more money, and 9% are aiming to reduce spending on living expenses.
Build That Emergency Fund
One of the places those savings should go is an emergency fund. This is money put aside in the event of an unexpected expense, such as a major car repair, a medical procedure, a broken appliance or a job loss. Some experts say you should have enough money saved to cover six months of household expenses, but if you can’t manage that, base your savings on what you spent on your last significant expense. One way you can guarantee regular savings is by having money taken out of your paycheck each time you are paid. Without an emergency fund, if something breaks, you will be forced to turn to credit cards and could start accumulating debt.
Better Funding for a Brighter Future
Fund your higher education with flexible and affordable student loans from AAA.
Learn MorePlanning for a Car
When it comes to meeting specific financial goals, such as buying a house or car, first take stock of your financial situation, Lyons said. Tally how much you currently earn, spend and save.
“Ideally, you don’t want to make rash decisions on any of these large purchases,” he added. “If the car is acting up, start doing research. Look into your credit report to make sure it’s accurate and resolve any items that may be on your report in error.”
Decide if you want to lease or buy a car. Once you know, determine what you can afford, factoring in other expenses, such as gas, maintenance and insurance.
Research cars, get member pricing on in-stock dealer inventory and apply for an auto loan all in one place with the AAA Auto Buying Program.
Identify the car you want and start looking at what they are selling for. Shop around for the best loan interest rates and then get pre-approved for a loan.
“If you do all those things, you can be prepared to act when that unicorn shows up,” Lyons said. Otherwise, if you see a car on a lot that you like, but haven’t researched or still need financing, you will be at a disadvantage to negotiate. If you don’t act and leave to do your homework, the car may be gone when you return.
Unfortunately, when it comes to cars, you don’t always have time to plan. If your car suddenly stops working or is totaled in a crash, you may have little choice when it comes to securing a loan or maybe even getting your first-choice car. Although there is the potential to refinance a higher-interest loan you may have taken with the dealer.
Get low rates on auto loan refinancing with AAA.
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For expert advice on the homebuying process, listen to Episode 7 of our podcast, Merging Into Life: Buying Your First Home.
Tune InTime to House Hunt
The process is similar if your goal is to buy a house. First determine what you can afford. The total value of the house should not exceed three to five times your annual household income, according to Fidelity. Saving money for a down payment is critical, added Lyons. The larger your down payment, the lower your monthly mortgage payment. Pay off credit cards balances, starting with the ones with the highest interest rates, to improve your credit rating and enable you to save more money.
Shop around to get the best mortgage rate, and if you can, get preapproved for a mortgage. With inventory low, houses sell quickly, and buyers need to be ready.
Learn how to be the best mortgage loan candidate.
Evaluating Student Loans
Refinancing private student loans is another issue that gets a look as a new year starts. Unfortunately, the current interest rates for private loans are likely higher than what customers already are paying, said Donald Kerr, director of student lending and college services for AAA Northeast. While a few years ago the rate was 5%, the current rate is 7%, Kerr said.
If you still want to consider refinancing, research lenders to find the best interest rates. A higher credit score is usually necessary to get the lowest rate. If you have multiple loans, consolidating them into one payment can save money and make repaying easier. Once you are approved for a loan and complete any necessary paperwork, the new lender will pay off the loan and set you up with a new rate and payment terms.
If you have a federal student loan, refinancing it usually is not advantageous, Kerr said. You may get a lower rate, but you will lose the protections and perks that come with a government loan, such as the opportunity to apply for deferrals and loan forgiveness programs.
Learn about affordable and flexible student loan options with AAA.
Whatever your financial goals, AAA Northeast is available to help. Contact AAA Financial Services.
Did you set any financial resolutions for the new year?
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