What are the hottest trends in personal finance for 2020? Experts and credit counselors say that there are big changes in credit card use, student loans, housing, transportation and other industries. All the trends pertain to personal finance in an important way. Here are the top ways that people are using, abusing and otherwise keeping an eye on finances:
Minimizing Credit Card Debt
The biggest trend in the world of personal finance has to do with credit cards and how they’re used. More people are opting to use just one card, or to keep a few, but pay off all balances at the end of each billing cycle. There is still, and always will be, a large segment of the population that uses credit irresponsibly. But among those who use credit wisely, the era of multiple cards and high balances is gone.
Being Smart About Student Loans
One thing millions of young professionals and others aim to do is to reduce their monthly payments for student loans. Mounting education debt can take its toll on a monthly budget. In fact, among adults between 25 and 37 years of age, student debt obligations are the second biggest liability, second only to a home mortgage. Maybe that’s why the new trend for education debt is to refinance it.
People who opt for this strategy from Earnest.com stand to save thousands of dollars annually. In fact, there are three ways that a refinance works to help those who take the plunge. First, and most importantly, monthly payments go down by a significant amount. That helps the budget in the short-term and has an immediate effect on personal cash flow.
Second, a refinancing agreement allows for longer repayment times. When people aren’t rushed to repay their education debt, they sleep better and feel as if they can breathe a sign of financial relief. Finally, a refi has the potential to offer a lower interest rate on the loan because it’s essentially a new contract. It’s pretty easy to see why student debt refinancing is one of the hottest money-related trends.
Micro-houses, mini-abodes, minimalist dwellings, and at least a dozen other clever names have been applied to the current trend toward small houses. The trend is especially evident among young buyers who are financing a residential purchase for the first time. Some of the advantages are obvious, but others aren’t. For starters, small homes come with smaller price tags, are easier to take care of and maintain, don’t call for large insurance premiums, come with minimal utility bills and are, at least now anyway, quite fashionable.
On the more serious, less obvious side of things, a general trend toward sustainable minimalism has been creeping into the arts, architecture, automobile design, literature and apparel design for about a decade. The entire de-cluttering movement, replete with books, videos and websites, preaches a lifestyle of using only what you need. One of the results of this social trend is tiny houses. So, it’s not all about the money or the location, location, location. Instead the small house craze is part of a much larger trend and will likely be with us for a long time.
The one-car family trend is part of minimalism as well, but in a different way. In fact, the one-car trend might eventually transform into the no car trend. An entire undercurrent of green and sustainable everything has suffused industries as diverse as automotive design, modern art, gardening and entertainment. The one-car phenomenon began about five years ago when an influential journalist, writing in an influential magazine on a major news site, pronounced that young couples could do the planet a huge service by opting to share one car rather than own two.
The manifesto caught on, at least in certain circles, and brought us to the place we are today. Young marrieds are working on the share system, sometimes with success and sometimes not. But the effort and intention are there and the result is not a very happy one for companies that sell cars. At least in urban areas, the one-car things can work out, especially when mass transit is a backup and ride-sharing services are available.
The bottom line for this trend is that it’ll probably stick around for at least a decade but could be co-opted by the ride-share movement. It’s a fact that many urban dwellers are nowadays choosing not to own cars at all. They use mass transit, ride-sharing, bicycles and electric mopeds to get from point A to point B.
Opting for Green Energy Savings
Experts say that one of the most transformational consumer products of the past quarter-century has been the programmable thermostat. The inexpensive little device has had a profound effect on culture, energy consumption and family cohesion. They also save home owners a ton of money every year on utility bills.
The personal finance trend related to green energy is this: the huge majority of new home owners are opting for items like programmable thermostats, super-efficient insulation, solar panels on roofs and in backyards, hybrid cars, smart lighting systems and similar money-saving components. How long with the green energy trend survive? This one has real legs and has the advantage of delivering serious savings to consumers, so it will probably be with us for decades to come.
Hands-On Credit Building
The Internet is a part of many personal finance trends, and the credit-building one is no exception. Since some of the credit reporting and disclosure laws were changed in 2011, and since the advent of worldwide Internet connectivity, individuals have been able to view and amend their credit reports whenever they want. Gone are the days when adults waiting patiently by the mailbox for their one free, annual credit report from each of the big three agencies.
Now, anyone can log into one of the credit-building websites, access all their scores, see the detailed data behind every component of the numbers, and opt for quick-fix strategies to up their credit rating. It still takes between one and six months for results, but there has never been as much power in the hands of consumers as there is today. Practically anyone can find out their scores, discover why the numbers are high or low, and begin the quest to remedy high credit usage, negatives on a given report, wait for hard pulls to go away, know who has requested information, and see a listing of all their open credit accounts.