to Consider in an Unsettled Environment
The financial environment
can be confusing, even in the best of times. It seems even more so today
in light of the financial crisis of 2008, the recession, the housing market,
high unemployment levels, low interest rates, volatile markets and uncertainty
over potential future government actions on taxes.
Even with all the
uncertainty, there are some actions that are always appropriate to consider.
In fact, the uncertain future could be the ideal time to review your financial
situation, clarify your goals and take actions to help you reach those
Review your financial
It is often recommended that you should have an emergency fund equal to
at least three months of living expenses. If you do not have that much,
start saving. If you already have three months' worth, consider increasing
it to six or nine months. According to the Bureau of Labor Statistics,
the average length of unemployment has increased from 17 weeks to almost
40 weeks over the past four years. Having more is better than not having
Be prepared to find
a new job
No one likes to think they may lose their job, but it does happen. Being
prepared can reduce the stress if it does happen and make it easier to
find another job. Here are some ideas to consider taking now.
- Expand the network
of people within your industry that could be helpful in a future job
search by joining a trade association or writing an article for the
- Save samples of
- Be sure your resume
is up to date.
- Take classes to
improve your skills or obtain certifications that could help you qualify
for a new job.
expenditures that could be eliminated if needed
Reducing your expenses is never easy. While eliminating a morning coffee
or dining out less often will save some money, they will not reduce your
living costs dramatically. To be prepared, you should identify some major
expenses that could be trimmed or eliminated if warranted. Things to consider
could include major vacations, private schools instead of public schools
and major purchases that could be delayed. Even if you never have to cut
your expenses dramatically, knowing that you could will provide some peace
Review your retirement
Most people have not taken the time to determine how much they need to
have saved before retirement to enjoy the lifestyle they want after retirement.
If you have not done this or it has been a while since you have, spend
a few hours and you may identify some actions to take now. If you have
a 401(k) plan at work, make sure you are taking full advantage of it by
contributing enough to get the full employer match and be sure you are
using an appropriate strategy for how your 401(k) funds are invested.
Review your estate
Estate planning is more than trying to minimize any estate tax that might
- Be sure your family
members know the whereabouts of important documents and are aware of
your desires on medical treatment options.
- If you already
have a will, be sure it is up to date. Changes in your family situation,
moving to a different state or a change in your financial situation
may create a need to revise your will. If you do not have a will, have
- Be sure to have
a durable power of attorney for finances. If you become incapacitate
or unable to make financial decisions, this document will make things
- Be sure to have
a durable power of attorney for health care. This document, along with
a living will, tells your family and medical personnel how you want
to be treated if you become terminally ill.
Handle your finances
Many people have difficulty just handling the "paperwork" associated
with their finances. Be sure to keep the important papers and don't let
unimportant papers take up too much room.
- Documents that
support items on your tax return need to be kept for three years after
you file the tax return they relate to. It is usually a good idea to
keep copies of tax returns forever, but electronic copies, such as PDF
files, will take much less space.
- Insurance policies
should be kept as long as they are in effect. Loan documents should
be kept until the loan is paid off. Receipts and warranty information
on major purchases should be kept as long as you own the item and could
make a claim.
Improve your financial
It is never too early or too late to improve your financial literacy.
Learning more about how to handle your personal financial situation as
well as what is happening in the overall financial environment is a worthy
goal and there are lots of resources available. Most news websites have
a finance or money section with many useful articles. Financial columns
in newspapers and magazines often offer suggestions for someone's issue
that may be similar to yours.