As we’ve learned, economic circumstances can at times change relatively quickly and unpredictably. Companies in some sectors may suffer while others thrive. Your personal economy, which is based on your particular situation, may be completely different than your neighbor’s.
It often feels like trying to predict what things will cost and where the economy is going is like throwing darts blindfolded. Take your best guess. You can listen to 10 different economists on any given day and get 10 very diverse opinions on where the economy is headed. And what is happening in your state or hometown is often much different than what is happening in other regions of the country.
Supply and demand are key factors in pricing. Housing costs have increased significantly over the last couple years as we come out of the COVID-19 pandemic. Because basic building costs have skyrocketed, homebuyers are looking for existing homes and the inventory is low.
People are on the move, some to areas where more opportunities exist currently. And people are relocating to where they truly want to be and living costs are less. They have learned that they can work remotely. No more lengthy commutes to and from the office.
Even though your economic circumstances can change suddenly, you can still plan and prepare yourself for whichever way the wind may blow. Are your finances resilient enough to effectively withstand whatever headwinds may come your way?
Look ahead at what could change in your life. What if you lose your job or your business? What if your spouse loses a job? What if you get sick and cannot work? We all know someone who has gotten into financial difficulties. We tend to think these problems will never happen to us.
Pretend your income stops and living expenses keep rising. How much money will it take to pay your bills for as long as necessary? Knowing what’s required to support your family for six months or a year is good information. You can then prepare yourself by building a rainy-day fund.
Keeping your debt manageable is important when it comes to controlling your destiny. If you are living paycheck-to-paycheck because you are making payments on your house, cars, boats, snowmobiles and credit cards, consider a scenario in which you are unable to support those expenditures. Figure out what items are necessities and what things are luxuries, and consider starting to make some hard choices to get on sound financial ground.
Knowing in advance how you can adjust to changing circumstances can be comforting. Can you or your spouse afford to change careers? Are you willing to move to improve your financial picture? Can you spend less and save more to buffer your reserves? Knowing that your finances are able to sway with the wind will give you peace of mind and the knowledge you can weather any storm for as long as may be necessary.
A version of this commentary originally appeared July 3 in the Casper Star-Tribune.
The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Partners®. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice. Individuals should speak with qualified professionals based upon their individual circumstances. The analysis contained in this article may be based upon third-party information and may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed.
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