We've seen it all over the last decade—record low interest rates, supply shortages and difficulties receiving goods, housing shortages, high gas prices, climbing interest rates, and more. In good times and bad, it's important to fortify your finances to help you navigate not just a changing economy but things like job insecurity or an unexpected crisis or medical event. So, how do you prepare for uncertain times? Read on for a few tips.
Pay Off Your Debt
If you have room in your budget, commit to paying a certain amount each month to get closer to becoming debt-free. The sooner you pay off all your debts, the sooner you can put more money into your savings account. If you have a few credit cards, think about getting a personal loan to consolidate the debt to help you pay it off faster and pay less interest. If you recently paid off a loan (or are about to), use the money you used to pay for your loan towards other debt or your savings account. You're already used to not having that money in your budget, which will help you become debt-free much faster.
Keep a Close Eye on Your Budget
To see where you can save, look at your past three months of checking or credit card statements and find places you can cut costs. Look closely at recurring subscriptions and other bills to see if there could be a cheaper alternative, like a different cell phone or internet provider. Look at your budget every month or two to see if it's still meeting your needs or if you need to make some changes here and there as your life changes. More on that in our article Getting Your Finances on Track.
Keep Investing in Your Retirement and Savings
Saving for retirement is a long-term investment. Even if the economy has a downturn, your investments still need time to grow, so you should continue putting money into your retirement accounts. If you're starting a new retirement account, do your homework since each type of account has different rules and restrictions. WaFd Bank offers two types of Individual Retirement Accounts, traditional and Roth.
Build an Emergency Fund
When it comes to saving, many experts recommend having enough money on hand to cover three to six months of living expenses in case you face a job loss, a cut in hours or pay, or unexpected expenses like medical bills. After paying bills, most people don't have much money left over. But regardless of the amount, it's essential to continue to focus on saving. Even $10 a month adds up over time and can help to motivate you to save even more. As you cut costs in other areas, you can put more money into your savings. Consider setting up automatic transfers from your checking to your savings account each month to ensure you meet your savings goal.
Find Different Ways to Earn Money
If you have a hobby outside of work that could earn you extra pocket money, try it. Whether you created them yourself or want to sell used goods or antique items, you have some options. If that doesn't interest you, explore other opportunities like freelance work or a side job. Different sources of income can help you stabilize your income overall and earn some extra cash to pay off debt or save.
Double Check Your Insurance Coverage
This is a big one. Things like this matter when you need them, so you definitely want to make sure you get insurance coverage. This goes beyond health; think about life insurance, short-term and long-term disability, and homeowner's or renter's insurance. Look over all your policies at least once a year to make sure they still meet your needs and make adjustments as needed.
Continue to Learn and Grow
By investing in yourself, you'll open doors and improve your chances of landing a good job later on. This will also help you be more resilient if the job market takes a downward turn. It doesn't need to be a degree either, even taking LinkedIn Learning classes can help give you an edge over other applicants.
Legal and Estate Planning
Just like insurance, legal and estate planning is crucial. Create or regularly update documents like wills, trusts, and powers of attorney so you can make sure your assets and any dependents are covered and taken care of according to your wishes. This offers you peace of mind and your loved ones security (and sanity, if anything were to happen).
WaFd Bank is Here to Help
When it comes to getting your finances in order for the ups and downs of life, a little planning goes a long way. Whether you're a seasoned budgeting pro or new to saving (check out WaFd's savings account options while you're here), your local WaFd Bank branch is available to help you reach your financial goals. Visit your local branch, open an account online, or give us a call at 800-324-9375 to learn more and open an account today.
