How to Boost Your Financial Health in an Unpredictable Economy

9.16.2022 | Category: Article

No one has a crystal ball to tell them what the financial future holds. However, looking at the unpredictable market and the latest increases in inflation, there may be signs of a market correction looming near.

If you're looking to be better prepared should a recession hit, now might be a great time to assess your financial situation and boost your financial health.

Review Your Budget

First, review your spending habits and get a good understanding of how much you spend monthly on expenses. Carefully assess what's coming in, what's going out, and if there are any line items in your budget you might be able to cut.

Also, see if there are any recurring fees or charges from services you no longer use. Oftentimes gym memberships, entertainment streaming apps, and other services auto-renew even if you're not using the service regularly. Consider if these offerings might need to get cut from the monthly budget. 

While this might seem like simple enough advice, it can be challenging with the cost of goods on the rise. Use the challenge as an opportunity to cut back on wasteful spending. Try to shop second-hand or look for sales for things you do need to buy like clothing or groceries.

Pay Down High-Interest Debt

If you have good credit, you could be in a solid position to request higher credit limits, negotiate a lower interest rate, or transfer the debt to a lower interest rate loan.

As interest rates tick up on personal loan accounts, don't shy away from calling that credit card company that sends you direct mail advertisements about 0% financing for loan balance transfers. If you think you can pay off your loan in the usual temporary time frame the 0% financing is offered for, you might find yourself saving hundreds in interest. This will also help you pay down the principal faster and pay down debt altogether. 

Take a Careful Look at Your Credit

You might also find that you're paying higher interest rates on credit cards or personal loans. Now's the time to carefully look at your credit card statements to see if you're getting the best rate on your credit accounts. If you’re not, call to find out how if you can qualify for better terms or call a competitor to transfer your debt. 

Right now, credit card companies are preparing for consumers to need to rely on them more often. It’s a great time to request higher limits with your existing creditors and take advantage of introductory periods and bonuses.

Explore Your Savings Options 

With interest rate increases, savings accounts might be offering better interest rates than over the last couple of years. Consider switching banking institutions to take advantage of sign-on bonuses or better rates. 

If you're a member of a credit union, you might find that you're able to qualify for much better savings terms and conditions. Typically, credit union members also benefit from lower interest rates on credit lines. A win-win if you're thinking about buying a car or taking out a new personal loan soon. 

Consider How You Can Earn More

If you’re thinking a job move could help you earn more, consider asking for a raise first. In this market, many employers know that staff might be tempted to look for another job and employers are willing to get creative to retain solid talent. If you’re itching for more compensation, bring it up with your supervisor and let them know how you feel before updating your resume. 

In addition, it pays to learn. Perhaps you want to take a course to further your career. Instead of paying out of pocket, make a case to your employer to pay for your course and once it’s complete, renegotiate compensation based on your new skill set. 

Assess Your Income Streams 

Assessing your income streams is important for passive income as well. You might find that passive income streams you once heavily relied on for retirement savings or other investment opportunities may not be as lucrative as they once were. Investment accounts might be charging higher fees. You might not be getting the return you expected. 

Now is a great time to meet with your investment provider or financial advisor to reassess and potentially reallocate your investments. While many advisors would recommend against pulling money out at this time, it’s always a good idea to make sure you’re not leaving money on the table.

Consider Owning Instead of Renting 

If you rent, you're always susceptible to your rent increasing over time, however most home mortgage loans offer fixed-rate mortgages with payments that stay the same over the course of the loan. If your credit is in good shape and you have a healthy savings, now might be a great time to consider homeownership instead. 

No renter should be afraid of today's interest rates. Not only are they comparable to pre-pandemic rates, but you'll never worry about your mortgage payment increasing over time like your rent can. It's better to enter the home market as soon as you can to take advantage of securing a traditionally appreciating asset. 

If you’re ready to get preapproved for a mortgage loan, contact a Mutual of Omaha Mortgage loan officer to determine your loan eligibility or give us a call at 1-800-24-RATES.