Tips to Help Improve Your Financial Outlook in the New Year
Welcome to 2022! With a new year comes new hope for the future and an opportunity to make positive changes in our lives. If you’re hoping to improve your financial outlook this year, the following actions can help.
- Plan for inflation – According to U.S. Labor Department data published on December 10, 2021, the United States’ 12-month inflation rate is 6.8%, the highest it’s been since June 1982.1 Rising inflation can have a big impact on your spending power. The following tips can help you combat inflation in 2022:
- Delay large purchases – Some price hikes may be temporary. For example, the chip shortage that helped drive up car prices in 2021 will likely lessen in the next few months, making auto purchases more affordable. Similarly, home remodeling projects may become more affordable as demand for raw materials and supply-chain issues ease.
- Maintain a diversified investment portfolio – A diversified mix of investments can help offset inflation. If your asset allocation drifted off course due to higher performance in some sectors than others, it might be time to rebalance. Your wealth manager can help ensure your target allocation is in line with your goals and positioned to help offset inflation.
- Negotiate expenses – It never hurts to ask for a discount on everyday expenses, as many ongoing costs are negotiable. Consider checking in on your streaming services, cable bills, cell phone plan, insurance premiums and gym membership to see if lower rates are available.
- Revisit your emergency fund – Given the uncertainty of the last couple of years due to the COVID-19 pandemic and potential changes to the tax code, it’s more important than ever to save in an emergency fund. If you depleted your savings in 2021, consider building up six months’ worth of expenses in an emergency savings account.
- Review your insurance coverage – Revisit any life, umbrella