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Inflation continues to impact Americans’ daily lives, driving up the price of goods and services. In this environment, many may wonder if there are steps they can take to better manage their finances.
Here are five tips to help keep your finances on track – now and for the long-term.
1. Reevaluate your financial strategies and stick to the basics.
The basics ring true whether we’re in times of growth or times of uncertainty. There are vital elements that prioritize protecting yourself and your family:
In the current environment, it’s important to take a step back and evaluate how to live within your means. You should consider how your income may change and develop a spending plan that will stay sustainable over time.
2. Establish or grow your emergency fund.
While it is difficult to focus on saving at a time when costs are high, having at least a few months of expenses is critical. The good news is that rising inflation has triggered higher interest rates, which means saving gets you more today than it has in some time.
Check your existing savings account and make sure you’re taking advantage of higher rates. It’s worth shopping around if your savings account isn’t offering these increases.
3. Get a handle on debt.
The flip side of higher interest rates giving better returns on savings is that debt also gets more expensive. Now is the time to evaluate revolving debt such as credit card debt, personal loans or loans against your home equity and work with your lender to create a plan that is sustainable in this environment.
Make sure you keep track of any favorable rates that are about to end, such as the end of your mortgage term, or the last month of your introductory credit card rate. Check if you might be able to get a better-than-market rate with a new mortgage provider or by shifting card debt to another card.
4. Ensure your protection-first approach has enough protection.
Life insurance is the bedrock of a protection-first financial strategy and it’s important to ensure that the coverage you have is adequate for any change in circumstances. If you’re choosing coverage for the first time, ask yourself these five questions.
Although it may be difficult to divert some of your budget toward long-term goals, life insurance is one of the best ways Americans can ensure their families are financially protected.
5. Look to the long-term.
When monthly bills start to rise, it’s easy to let go of long-term financial goals. But financial planning is a whole-of-life strategy. Try first to cut other costs and keep your long-term retirement goals in sight.
Younger savers should stay the course with their retirement savings accounts but they can consider temporarily decreasing contributions, as long as they’re still able to receive an employer match.
Those closer to retirement have less time to recoup market losses, so they should make every effort to establish a guaranteed lifetime income that can help ensure basic retirement needs are met.
At New York Life, we want to offer you the information you need to make good financial decisions. If you need any further guidance, connect with one of our financial professionals.
New York Life Insurance Company