Are you a saver or investor trying to navigate the current environment of higher inflation and higher interest rates? What does the Federal Reserve’s (the “Fed”) federal funds rate decision (happening this week) mean to your overall financial picture? We have had a year plus of interest rate hikes – impacting things like how much you pay on credit cards, car loans, and home mortgages, as well as how much you can earn in your savings account. In this episode of Money Hacks, we discuss some strategies that may help in managing your personal finances during this period. We will look at topics including cash savings, like high-yield savings accounts and emergency funds; and liabilities and debts, such as credit card debts, student loans, and personal loans.


Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode?

Video Transcript:

Hey, it's Alex Assaley. This is episode number 105 of Money Hacks. By the time you're watching this video, here in early May, you might have already heard from the Federal Reserve on whether they're hiking rates or if they're holding, uh, for the most recent meeting. Regardless, we've had a year plus of interest rate hikes that have impacted, a number of areas in the economy, in the financial markets, and in our own personal finance when it comes to spending and savings. So, it's on everybody's mind. What's going to happen over the course of the next six months and further with respect to interest rates? Will that help bring down inflation? And what should I be doing when it comes to my overall financial picture?

So, a few things that we've been talking about in our one-on-one coaching sessions, and I'm sure I've talked about this earlier this year. But I want to reiterate things like cash savings, want to make sure those are in high yield savings accounts and vehicles that are earning the appropriate yield in today's rate environment: high 3%, 4% annual yield on your high yield savings, your emergency savings accounts. Other areas of your financial picture like liabilities and debts. So, uh, credit card debts, student loans, personal loans, things that have variable rates are probably at much higher levels than they were a year or a year and a half ago.

That additional interest you're paying on those debts really creates a drag on your cash flow. It's probably a good time to reassess any type of installment that you have. Look at what the interest rates are and determine the best way to pay those down or pay them off quicker for the long term.

We think that the Federal Reserve at some point will be forced to start cutting rates, but this is a big debate in the financial markets and in the financial marketplace today. In fact, the fixed income or the bond markets are predicting that the Federal Reserve will start cutting rates before the end of 2023.

Now, J Powell and the Federal Reserve Committee have been committed to staying where they are in their rate hiking policy to keep rates higher, to bring inflation down, and they don't anticipate they'll begin doing any rate cuts until 2024. This difference of opinion has set up a bit of a bumpy ride in the financial markets.

So, when it comes to investing in things like your 401K or in other investment accounts, make sure you're doing it in a way that's right for your age, your time horizon, when you're going to use that money and your overall preference for risk. If you have money that you're going to need in the nearer future in a couple of years or less, you need to be very careful if that money is in the markets because we continue to see volatility through the course of the next six, 12 months, maybe even beyond.

So, where do we go with interest rates? What's going to happen with inflation? Almost impossible to predict a lot of uncertainty, and we think that's creating uncertainty in the financial markets and in the economy. So, I guess you'll have to stay tuned for a future Money Hacks for more information. Thanks.


See you soon.