When faced with economic uncertainties, it’s important to review and adjust your financial plan to ensure you have control over your finances.
When the economy faces disruption, the effects are felt by many. Some people lose their income while others watch their investment portfolio take a hit. But even without facing a major financial hardship, many Americans still feel the pressure of a volatile economy and are opting to tighten their financial belts.
Whether you’ve had a financial plan in place for years or you simply want to take control of your finances during tough economic times, use these tips to ensure your finances are prepared for whatever comes your way.
Start with Your Goals
Before you can begin planning or adjusting your plan, you’ll need to revisit — and potentially reevaluate — your financial goals. Sit down and write out your top 10 financial goals, both long-term and short-term. Once you have your list, consider which goals are most important to you. Saving for retirement? Paying off debt? Using this financial goal worksheet, prioritize your goals, create a target, and keep track of your progress.
Cut Back on Unnecessary Expenses
When money is tight, take steps to tighten your financial belt. First, review receipts and the previous months’ bills, then cut your expenses to reflect a practical budget. For example, cancel subscriptions that you rarely use or pare down your phone and internet services as much as possible. Cut back on dining out and reduce the cost of groceries by meal planning or choosing recipes that call for ingredients you already have stocked.
Rework Your Budget
Once you’ve taken a thorough look at your finances and considered where you can make the necessary adjustments, take time to rework your monthly budget. This budgeting worksheet can guide you through the budgeting process. Start by adding up your monthly income then record how much money you plan to save each month. From there, walk through a number of spending categories — utilities, transportation, health, and wellness, etc. — and write down how much you plan to spend each month. At the end, review your monthly totals and tweak your numbers until you’re pleased with the result.
Focus on Paying Down Debt
During uncertain times, looming debt payments may increase stress. Focusing on your debt payments with the highest interest rates can help you avoid paying too much interest in the long-run. If your debts have similar interest rates, pay off your smallest balance first, then put that monthly payment amount towards the next smallest balance.
Rethink Your Savings Strategies
In addition to paying down debt, you likely have some long- and short-term savings goals you may need to reevaluate. Are there non-essential savings goals you can push back or pause, such as saving for a vacation or a new car? When the economy is uncertain, you may decide to shift your focus to building an emergency fund. As a general rule, try to have three to six months of expenses in an easy to access savings account. Use this savings calculator to find out how much you should have in your emergency fund.
Tweak Retirement Contributions
If you’re able, do your best to continue contributing to your retirement accounts throughout this period. If you need to reallocate some of your funds, tweak your contributions for a short period of time and make sure to use the leftover funds to pay down debt, cover essential expenses, or contribute to your emergency fund.
Whether you're facing financial uncertainties or simply planning ahead, we're here to support you. Visit Regions Next Step for tips, tools, and resources designed to help you stay on track and safeguard your future.
