The New Year is always a great time to evaluate your money and career. A recent survey by Numerator found that more than half (53%) of Americans have made financial decisions to ‘save more money’ or ‘track their spending’ for his 2023 year. understood. As his two financial trends that many will prioritize in the coming year.
Given that many economists and analysts have been predicting a recession for some time now, and Moody’s suggests the US is headed for a “recession” that could last all year. is not surprising. What’s more, according to a new Gallup poll, eight in 10 of her Americans believe 2023 will be fraught with financial hardship. Also, 65% believe the overall price of goods and services will continue to rise (thanks to inflation), and 81% believe taxes will go up this year. It doesn’t help that technology companies such as Meta have laid off thousands, sometimes tens of thousands, of employees.
So what can you do?
These five steps are a great way to set yourself up for success. Or you can build a stronger footing during recessions and unemployment.
Create or replenish emergency funds
If you’ve depleted your recent savings, or stopped saving altogether, you’re certainly not alone. After all, the personal savings rate (the percentage of disposable income people save) fell from 3.4% last quarter to 2.4% in the third quarter, according to the Bureau of Economic Analysis.
But the silver lining that the Fed recently raised its benchmark rate by half a percentage point to 4.25% to 4.5%, the highest level in 15 years, is that savings accounts are earning more interest than they did more than a decade ago. is doing High-yield savings accounts, certificates of deposit (CDs), and interest-bearing savings tools such as US Treasury Series I bonds can provide higher yields for cash savers.
read more: Have you used your emergency fund? Do not panic.7 steps to undo it
So it’s the perfect time to restock that financial cushion. Automate your savings so you pay yourself first before you start spending your income. This includes prioritizing retirement savings, such as increasing 401(k) contributions by one percentage point. That money usually comes in before taxes, so it doesn’t affect your net income as much as you might think. And spend less. See the tips below for this.
Launched “Carrier Cushion” just in case
As the old saying goes, finding a job is often easier when you already have one. The job market still looks relatively strong, but fears of a recession and reports of mass layoffs at tech companies are making many workers uneasy. That is why “carrier cushions” have emerged as a way for people to protect their livelihoods. It’s basically another term for “career planning” such as continuing your network, updating your resume, and learning new skills. (Reducing spending and increasing emergency funds are also part of this equation.)
read more: What is a “Carrier Cushion”? should i do that?
Career experts say it’s always a smart choice to practice a career cushion, no matter what the future holds. So what should we do? Have coffee or lunch with people in the role you want to be and pick their brains. Update your job profile on platforms like LinkedIn, Indeed, Monster.com, his skills or talk about what recruiters are looking for right now.
Reduce unused or unnecessary subscriptions and recurring charges
The average American underestimates monthly subscription costs by $133 and pays an average of $219 per month. think They’re just dropping $86 or so. Main cause: Most people set their recurring monthly fee to automatic monthly payments and then forget about it.
read more: Underestimating monthly subscription costs by $133: “Money no longer available for other goals such as retirement savings, debt repayments, emergency funds, etc.”
Now is the time to check your bank and credit card statements for recurring charges from streaming services, newspaper and magazine subscriptions, fitness and wellness center memberships, apps, and more. Note them down and add them up to see if the price has gone up and sum up your total cost.
Now is the time to decide where you can cut your economic fat. and relentlessly. Do you really use these services every month? Or — in the words of Marie Kondo — do they bring you joy? Please save! But you might be surprised how many subscriptions and memberships you forgot. Or maybe some prices have gone up to the point where you’re paying more than you think. It can be used to cover money or top up emergency savings.
Create a will or reassess your current estate plan
Billionaires aren’t the only ones who need to make a will. Everyone needs to sort out their affairs, but less than half of American adults have a will that outlines how they will handle their property after their death, according to a Gallup poll. And if someone dies without a will, the local probate court must decide how your estate will be distributed. Money or your property may not be able to do so for some time, if at all.
read more: What Coolio, Prince, and Picasso Didn’t Have, and You Should Have
In addition, real estate planning requires more than just who gets what and how much. Perpetual Power of Attorney (allows to make financial decisions for you if you become incapacitated), Power of Attorney for Health Care (can make medical decisions for you if you become incapacitated) ), and custody appointments for your child. some.
Also, even if you have a will, it’s a great way to review your documents and beneficiaries to see if any changes need to be made, such as after a major life event such as getting married, buying a home, or having a child. It’s an opportunity.
Pay off credit card debt and pay off larger debts
A recent LendingTree study found that more than one in three Americans (35%) had vacation debt in the past few months, with the average debt reaching $1,549. 2015. Her 37% of those with holiday season debt expect to pay off their debt within the next five months.
Also note that the Federal Reserve is raising rates, which means the annual rate of credit card debt is higher, which means higher monthly bills. please.
So what can you do? Call your credit card company and ask if you qualify for a lower interest rate. Check out balance transfer credit cards. This allows you to transfer your debt to a new card with 0% interest for up to two years.
Then come up with a payment strategy. This may involve “snowballing”, paying off small debts first and then building up payments to larger balances. There is also an “avalanche method” in which the highest interest rate is repaid first. Indeed, try to pay more than the minimum monthly payment so that you can pay off your card faster. You can also consider working with a financial advisor.
read more: If you’re struggling to pay off your debt, follow these three steps to make it happen.
And MarketWatch has many more guides to start 2023 on the right financial footing.
Americans Top New Year’s Financial Resolutions — And The Timing Couldn’t Be Better
6 New Year’s resolutions for retirement: Back to basics
Inflation has hit American wallets hard this year — here’s what they plan to do about it in 2023
5 things you should never buy in 2023