How to Navigate the “I Don’t Know” Economy
Read on as CFP® and personal finance expert Bobbi Rebell explains how to maximize your finances — in spite of all the ambiguity of the moment.
Bobbi Rebell, CFP® & Personal Finance Expert at Tally
October 1, 2021
If you feel like you’re stuck in limbo right now, you’re not alone.
Many expected September to be a return to normal, but it has become for many Americans. Workers across the country still don’t have clarity on when they will return to the office. Parents worry if coronavirus outbreaks will put their kids at risk and shut down their schools again — and what child care options will be available, if any. Businesses don’t know when supply chains and shipping bottlenecks will ease, the impact of that on prices and inventory, or how consumer appetite for spending will change as government-funded pandemic aid winds down.
What to do? Focus on controlling what you can — including the decisions you make about your money.
Here are some ways to navigate the “I don’t know” economy and put a financial plan in place that makes you feel stable and secure so you can focus on enjoying your life.
Create a financial backstop
Now that a fair amount of extra government support is ending (while the pandemic is not), many are wondering how they can put stronger guardrails in place.
For starters, check in on your emergency fund. Now that we’ve seen our money last longer than we expected, you may be in better shape than you thought. Keep up the good work and set up auto-transfers into savings for each paycheck to keep building it.
I also advise you to think about how you can access cash while adding to your emergency fund or if you need to go beyond it. For example, homeowners may consider setting up a HELOC (home equity line of credit) if they qualify. This would give you access to cash without having to rely on credit cards if they run short. The loan, and payments, only kick in if you use the credit line.
For investors, if you have money in the stock market, you may have made some money over the last year and can take advantage of those wins. Take a look and consider rebalancing to make sure your asset allocation is where you want it to be based on your risk profile. We’ve had some scary days already this fall, so try to be really honest about how you would feel if the market started to really drop for a longer period. It happens. If it fits your goal of having access to more liquid cash, adjust your portfolio to reach that goal. As always, everyone’s risk levels are different. Consult your financial planner before making changes to your strategy.
If investing in stocks or other risky assets makes you feel uneasy, CDs of different durations can help you grow your money in a very safe and guaranteed way.
Replacing unemployment benefits
Now that the extended unemployment benefits have expired, many need to replace that income but aren’t necessarily ready to return to work in person with so much uncertainty looming.
Luckily, there are so many jobs you can do safely from your home if you don’t feel ready to get out there. Pre-pandemic remote jobs were often limited to the gig economy. Now, many companies and industries have shifted to remote work.
Think about your skill set and what you bring to the table while keeping in mind the lifestyle you want to live.
Do you want a job you can do at any time of the day (or night!) and not have to interact with people? Or do you crave interaction and you want to be “on” with co-workers and working remotely but together?
Do you want specific work hours so you have a structured day? Or are you ok with being on call 24-7? Make a list of your priorities and begin searching for jobs that line up with what you need to be happy and comfortable at work.
Budgeting when price tags are inflated
Inflation has hit new highs this year and consumers are starting to feel the impact as businesses pass on additional costs. That’s pinching consumer’s budgets because incomes can’t always be upsized so easily.
Start by cutting the guilt. Price tags may be inflated, but for most of us, our paychecks are not. Don’t beat yourself up or feel bad. We’re all feeling this pain.
It’s important to keep playing by the rules to keep your finances healthy. Continue to make auto-deposits into your savings and investments. From there, pay for the non-negotiables like housing, food, insurance and things you need to do your job and have income — like WiFi and your cell phone. Then, you can work with what you have left from there.
If you don't have enough funds to pay for the lifestyle you want, ask yourself how important each expense is. You may not want certain ones that badly and that’s ok. But if you do, get creative and find ways to boost your income. Since the job market is tight, think about whether you can ask for a raise. You can also consider taking on a side hustle that you can do from home to help offset rising price tags.
Proactively managing credit card debt
If you splurged this summer and now have credit card debt to pay off, it’s time to get proactive. If you can’t pay off all your balances each month, at least try to pay a bit more than the minimum. You can also make “micropayments,” which are smaller payments that you make when you can to get ahead of your due dates. Anything you can do to keep your balance from ballooning will help you make progress.
If credit card debt is looming large in your “I don’t know” economy, consider trying Tally† to help you manage and pay off your debt faster. If you qualify for Tally’s credit line, you can consolidate your credit card debt into one monthly payment at a lower interest rate and get late fee protection. You will also get peace of mind that you are taking charge of your financial life.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.