More Than 1 in 3 Americans Is in Worse Financial Shape Than Last Year. Do These 3 Things if You Feel the Same
- Inflation has put a lot of people in a tough financial spot this year.
- If you're unhappy with your finances, these moves could help things improve.
- Saving up an emergency fund, making a debt payoff plan, and a second job can all get your finances in better shape.
There are steps you can take to improve your outlook.
It's fair to say that 2022 has been a tough year for a lot of people -- namely, because we've been grappling with rampant inflation since the start of it. Over the past 12 months, many consumers have been forced to raid their savings and rack up costly credit card debt not to take vacations or update their homes, but to do basic things like keep the lights on and put food on the table. And so it's not all that shocking to learn that more than one-third of Americans say they're in worse shape financially now than they were last year, as per a recent Fidelity study.
If you feel that your financial situation has worsened over the past 12 months, you're clearly not alone. But you should also know that you aren't trapped. Here are a few steps you can take to improve your financial outlook -- and close out 2023 in a much stronger place.
1. Build an emergency fund
Having money in a savings account buys you protection when your bills start climbing, or when unexpected ones land in your lap. If you want your financial outlook to improve, work on building an emergency fund in 2023, even if it means socking away a small amount of money each month. Having that protection could give you peace of mind, and that alone could help you feel like you're in better shape financially.
2. Establish a debt payoff plan
If you were forced to take on debt in 2022, then that alone is a good reason to feel down about your finances. But that doesn't mean you're stuck with that debt for years on end. If you come up with a solid debt payoff strategy, you might be able to shed it sooner than expected.
Let's say you owe several thousand dollars on your credit cards. One strategy you might employ is consolidating that debt via a balance transfer. If you're able to move your balances over to a new credit card with a 0% introductory APR, you'll get a break from racking up more interest for a period of time.
3. Take on a second job
The problem of inflation is likely to persist in 2023, at least at the start of the year. And because of that, you may find that it's a struggle to squeeze extra money out of your paychecks to build an emergency fund or pay off debt. That's why it's a good idea to consider a second job.
Will doing so mean losing out on downtime? Yes. And to be clear, that's a big deal, because having free time is absolutely essential to your mental health.
But you don't have to commit to a side job forever, nor do you have to take one that's difficult to manage. You can find a gig that's flexible, like doing data entry online or driving for a ride-hailing service, and boost your income when you can spare the hours. That extra money could really help you get to a better place financially.
It's easy to see why so many people are ending 2022 on a sour note, financially speaking. But if you take these steps, you might feel very differently 12 months down the line.
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