High unemployment, government cutbacks and layoffs and a national debate about raising the country’s debt limit have done little to reassure the average American about the economic future.
“Absolutely, a lot of concern,” said Trish LaRue, financial adviser at Dan Cary and Associates.
That means it’s a good time for individuals to focus on their own economic health, she said.
“That’s the only thing you can do,” LaRue said.
Pete Knutson, a financial adviser with McDaniel Knutson Financial Partners, said the big challenge is convincing people to rethink personal spending and saving habits developed when the economy was strong.
“Whatever it is, it’s going to be better tomorrow,” said Knutson of Americans who believe the future will always bring more money and promotions.
But in an uncertain economic time, that’s not as true today as it was in previous decades, he said.
It doesn’t necessarily take guidance from a financial adviser, and Knutson offers the following tips to people concerned about their economic health:
- Find out what you’re spending and how that matches your income. Numerous websites, such as mint.com, offer free, personalized budgets that link directly to bank accounts.
- Look at areas where you can cut expenses. If that doesn’t bring you where you need to be, it may be time to focus on the larger, fixed expenses, such as housing and transportation.
- Work to pay off any debt you have. Under current interest rates, having debt is costing more than it once did.
- Knutson’s rule of thumb is to set aside 20 percent of your income, and use that money to pay off debt and put in savings.
- Plan out “what if?” events to be prepared if they do happen. For instance, how would your budget look if you or a spouse lost their job?