There’s no way to sugar coat it. The economic forecasts for 2023 are, well, less than comforting. According to the latest monthly survey of 38 economists from Bloomberg, there is a seven in 10 chance of recession heading our way this year. That’s double the projection from six months earlier. After seven successive interest rate hikes, stock and bond markets that more than disappointed, inflation that hit 40-year highs and a housing market that went from hot to not seemingly overnight – all in 2022, by the way – perhaps it’s not surprising.
But here’s the thing: The economy is not your personal economy. Although many (OK, all) of those aforementioned economic factors are beyond your control, in your own personal economy there are just as many that you can manage. And by managing them, you increase your financial resilience and reduce your financial stress. So, with that in mind, here are five money moves to make right now that will shield you from any economy and set you up for financial success.
Money Move #1: Keep an eye on your cash flows
Peter Drucker, the so-called father of modern management theory, once famously said: Whatever gets measured, gets managed. When it comes to your money, what this means is that if you don’t know what’s coming in, what’s going out and where it’s going, it is really difficult for you to decide how you best want to use your hard-earned dollars.
Knowing typically means tracking your spending – and there are a lot of ways to do that. You can use an app like mint or YNAB, you can rely on your online banking portal, you can go old school and just jot down what you spend. Just make sure you’re capturing all of it: the one-click Amazon orders, the Venmo transfers, the iPhone spend. Once you’ve done this for at least two weeks and preferably a month (to get you through a couple of paychecks and at least one bill-paying cycle) go back and look it over.
Are there subscriptions you forgot about? (For 42 percent of people ,according to a recent survey from C + R Research the answer was yes.) Are there categories – food, pets, rideshares – where you are just astounded by the number on the page? Cancel the subscriptions, and think about things you can do to rein in the latter. Where food is concerned, have you abandoned your pandemic cooking habits and gone back to takeout? A step in the other direction is likely good for your wallet and your waistline.
Oh, and as you find more money to save, make sure you’re earning something on those dollars. The average bank savings account is paying .22 percent interest right now. The best is paying 4 percent — a return nearly 20 times higher. You can find a list of the best high-rate savings accounts here.
Money Move #2: Invest for tomorrow
There is an old belief that women are the household budgeters, but take a backseat when it comes to investing and retirement planning. It’s wildly out of date. According to The State of Women, 2022, a study of more than 2000 women from my company, HerMoney.com and The Alliance for Lifetime Income, 80 percent of women prefer to make decisions about retirement themselves – rather than deferring to a spouse or a partner.
We understand we are investors…but we are also at a point in our lives where we want to learn more about it. That’s why I recently teamed up with CNBC’s Karen Finerman, a panelist on Fast Money and a professional investor, to launch InvestingFixx, an investment club for women. Every other week, we meet with hundreds of women on Zoom, to learn about the fundamentals of investing and build a portfolio together.
Money Move #3: Work on your credit (and minimize your debts)
During the heart of the pandemic, Americans built savings and paid down credit card debt (thanks, stimulus checks). A year later, things are moving in the wrong direction. According to credit bureau TransUnion, the average credit card user was carrying a balance of $5,474 toward the end of 2022 – up 13 percent from the year before.
With every successive interest rate hike, that debt is going to get more expensive. But if you have good credit, you still have an opportunity to reduce what you’re paying by lowering the interest rates in your portfolio (again, it’s about your personal economy, not the economy at large.) Working on your credit is a matter of good habits – paying your bills on time every time, not applying for credit you don’t need, keeping the percentage of your existing credit lines you’re using under 30 percent (if you’re over that much, ask for an increase in your credit limits then don’t use it.)
Once your credit score is in good shape (at least the high 600s, preferably the mid 700s) look for a zero percent balance transfer card that will allow you to pay off your debts faster and cheaper. And, if you’ve got a car loan with a rate of 7 percent or more – think about refinancing it with a credit union where the average rate is under 6 percent.
Money Move #4: Always be interviewing
Earlier this week, Microsoft announced it would be laying off 10,000 employees and Amazon 18,000. Those were on the heels of layoffs from Meta, Peloton, Coinbase and other companies that grew at a fast and furious pace during the days of the pandemic and cheap money. Today, it’s smarter to keep your LinkedIn profile polished, your resume up-to-date, your headshot fresh and your contacts humming – particularly, says Lauren McGoodwin, CEO of CareerContessa.com if you work for a company that’s more “glitter than glue.” In other words, a company where you at least occasionally found yourself scratching your head and wondering if they were as successful as they seemed.
“Layoffs make companies pause,” she explained. Even companies that are doing fine, financially, may put a halt to their hiring as they wonder what the economy will bring. During times like these she advised: “Always be job hunting.” Even if you’re happy with the job you have.
Money Move #5: Make those money conversations a regular thing
The beginning of a new year is always a good time to make a financial fresh start. But you don’t have to go it alone. If you have a spouse or partner, this is a good time for a goals assessment – to make sure that you are both marching in approximately the same direction. And whether you do or not, Secure 2.0, a law signed by President Biden earlier this month brings some important changes to the retirement landscape. Checking in with a financial advisor – even if you’re just doing it in the form of a physical every few years rather than in, say, a quarterly check-in kind of way – is always a smart move.
Jean Chatzky