ECONOMIC UNCERTAINTY –
Preparing for the Unknown
by: Lee Summers, Project Manager, C Mechanical Services
It’s no secret that the economy is rapidly heading towards uncertainty. Unfortunately, we are all subject to the consequences of that same uncertainty. Every time you put gas in your vehicle, buy groceries at the store, or purchase lumber at the supply house, you’re seeing, and FEELING the ramifications of the unsteady economy. The best thing anyone can do to ensure they can weather the storm is to be prepared. Elizabeth Warren once said, “Budgeting your money is the key to having enough,” and I would agree that this is a mainstay of financial preparedness.
Take some time to sit down and build your budget; start with your monthly household take-home income, then list out all your expenses. Don’t forget those monthly subscriptions to Bark Box and Hulu! Once this information is together, and you do some math, you’ll quickly see if there are discrepancies between your income and your spending. This is a great opportunity to set savings goals and start putting away that rainy day fund. This is also the time to review and eliminate any unnecessary expenses; Think: do I REALLY need to have Disney+, Hulu, and Netflix?
Once your budget is established, look at your savings goals. Perhaps you already put money away each month and feel confident in your savings plan. If you aren’t in this position, I suggest you make it a priority. At a minimum, everyone should have an emergency fund; that is, a basic $1000 savings that you only use for emergencies. Obviously, this amount won’t get you very far with today’s prices, but this is a basic SMART goal (SMART is an acronym for specific, measurable, achievable, realistic and timely.) It is important to remember that setting small, attainable goals for your financial future will keep you on the right track for security.
Last, look at your debts. Obviously, some debt is nearly unavoidable especially at a young age (who has 250k laying around to buy a house?) Consumer debt reached 15.6 trillion dollars in 2021. Just for reference, that looks like this: 15,600,000,000,000! That is an unimaginable amount of money to be repaid. A quick interest calculation at an average 9% interest rate shows that if paid off in 100 years, 117 billion dollars would need to be paid each month, with a whopping $124,817,920,773,968.61 in total interest payments! That is money that we as consumers are throwing away month after month.
No one knows for certain what the economy will do in the coming months, or even years. The only way to have some security is by preparing. Make a budget and stick to it. Find ways to cut out unnecessary expenses. Save your money and get rid of your debt. These steps will help to ensure you and your family can weather the storms ahead.
Posted May 17, 2022