- Today's economic climate is a tricky one.
- If you have concerns going into the new year, you're in good company.
- There are steps you can take to address your primary worries, such as boosting your savings and cutting your excess spending, if possible.
Are any of these on your list?
It's natural to worry about money from time to time. You might, for example, be less than thrilled about the savings account withdrawal you took this year to cover an unexpected home repair. And you may be anxious about the fact that you're not really making great progress in funding your IRA account.
Meanwhile, a recent Fidelity study reveals that Americans have a number of financial matters on their minds going into the new year. Here are the top concerns cited -- and what to do about them.
Surprise, surprise -- inflation tops the list of Americans' big worries going into 2023. Given the way living costs skyrocketed this year, that's understandable.
The good news is that recent data tells us that inflation has been easing. That doesn't mean we're back to where we were before mid-2021, but there are positive signs. But if you're worried about inflation wreaking havoc on your finances in the new year, one important thing to do is start following a budget. That could help you better manage your expenses and conserve cash at a time when costs are still elevated.
Another option? Shed some unnecessary expenses. You don't have to give up everything you love, but it wouldn't hurt to spend more carefully on items that aren't needs, but rather, wants.
2. A recession
Given that financial experts have been sounding recession warnings for much of 2022, it's easy to see why this is such a big concern for people going into 2023. But first, know that despite what you've been hearing, the economy is by no means guaranteed to take a turn for the worse in the next 12 months. Right now, the labor market is holding strong and consumers are continuing to spend. So we may find that all of those recent warnings are largely overblown.
That said, it's a good idea to boost your savings so you have money in the bank to get you through a recession that results in job loss. In fact, your emergency fund should have enough cash to cover three months' worth of essential bills at a minimum. If you're not there yet, bump up your savings rate as best as you can.
3. Unexpected expenses
An unplanned bill can land in your lap at any time. And it's easy to see why so many people are worried about facing unexpected costs given that their paychecks are disappearing so quickly due to inflation.
But you know that emergency fund we just talked about? That's what's going to bail you out of a jam the next time you're hit with an expense you weren't anticipating. So the more money you put into your savings, the less you'll have to worry about.
It's natural to be worried about certain financial matters, whether they relate to the broad economy, like inflation and a recession, or whether they relate to you, like unplanned bills. But all of these concerns are events you can prepare for. And if you take those steps, you might manage to ease your fears and sleep better at night.
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