Category Saving

As 2025 draws to a close, the U.S. economy faces uncertainty due to changing Federal Reserve policies, high inflation, and rising living costs. The Fed is hinting at possible interest rate cuts, but for now, borrowing remains expensive and wages aren't growing fast enough to keep up with prices. To stay financially strong during these times, experts like Fidelity suggest five smart money moves: review your spending habits, build up your emergency savings, pay off high-interest debt, contribute as much as you can to retirement accounts, and make sure your investments still match your goals and risk level. These steps can help protect your finances from unexpected changes in the economy and set you up for a stronger financial future.

In today’s tough economy, many Gen Z young adults are finding comfort in what they call “little treats”—small and affordable luxuries like fancy coffee, a new lip balm, or a quick takeout meal. These tiny splurges help boost their mood and give them a sense of control amid rising living costs, job uncertainty, and the struggle to reach big life milestones like buying a home. Social media has helped popularize this trend, creating a culture that celebrates rewarding yourself, even for minor wins. While these habits can support mental health and make daily life more enjoyable, they may also add up financially over time. Since many Gen Z-ers already feel financially insecure, regularly spending on small extras—without a solid budget—can make it even harder to save for long-term goals.

As of August 2025, high-yield savings accounts are offering interest rates near 5%, which is much higher than usual. This is happening because of ongoing concerns about inflation around the world and uncertainty about what the U.S. Federal Reserve will do next with interest rates. Right now, the Fed is being cautious, not lowering rates yet due to mixed signals from the economy. For everyday savers, this presents a great chance to earn more from their savings without taking big risks. With rising government debt and economic uncertainty, keeping cash in a high-yield savings account can be a smart short-term move while waiting to see what happens next.

As of August 2025, high-yield savings accounts are offering interest rates as high as 5.00% APY, giving savers a rare chance to earn strong returns with low risk. This has happened because the Federal Reserve has kept its key interest rate between 4.25% and 4.50% since late 2024 to help manage inflation while the economy faces global uncertainty, especially from trade talks with countries like China. With stock and bond markets remaining unpredictable, more people are turning to savings accounts as a safer place to grow their money. Banks are also competing for new customers by offering higher rates, making now a smart time for individuals to compare options and take advantage of better savings opportunities.

As interest rates and living costs remain high in 2025, Gen Z is changing how they save money. Instead of focusing on retirement, many are putting their money toward things that improve their lives right now, like traveling, buying reliable transportation, and finding good housing. According to recent data from TIAA, while over 80% of Gen Z are saving regularly, only about 20% are putting money away for retirement. This shows a clear shift in priorities—many young adults want flexibility and value experiences more than long-term financial goals. These habits fit a larger trend where people are spending either very carefully or on high-end treats, and enjoying more time eating out and shopping in person, even though many still work from home.

As of August 2025, savers can still find high-yield savings accounts offering up to 5.00% APY, with banks like Varo leading the way. These high rates are mainly due to the Federal Reserve’s recent efforts to control inflation by keeping interest rates high. However, with signs that the Fed may begin lowering rates later this year or in 2026, these savings rates could drop quickly. That means now is a smart time to take advantage of these strong returns, especially through FDIC- or NCUA-insured accounts that protect your money. Still, it’s important to stay alert—if the Fed changes course, rates may fall fast.