HUNTSVILLE, Ala. — From soaring inflation and rising interest rates to the ongoing effects of the pandemic, we can expect the economic landscape to remain predictably unpredictable. While there's not much we can do to influence the economy, there are ways to ensure our own finances are intact to make in through 2023.
Dr. Qian Ruby Shen is the Interim Dept. Chair of Accounting and Finance at Alabama A&M University. She says, "You know, with the high inflation and everything, you know, even in 2021, the personal savings rate dropped to 10.5%. [To save], the bottom line is everybody should have a plan and there's no income limit. So if you're just making hourly wages, you'll still need to have a plan or in this case in your may just want to set aside some money."
Financial planning is for all levels of income, and part of that is understanding how to properly create a budget as early as possible. "So we're talking about here is to have a person to have a complete picture of this person's short term and the long term goal. And once a person has a picture of, you know, what the goal is and that they probably will have some sort of plan to do some sort of a planning. The most important thing is always your business is to start young, so you'll start young and you will make a habit," says Shen.
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Other things to think about? Prioritizing an emergency fund and staying on top of debt by using cash. Shen explains, "The emergency fund is getting more and more important in this economic environment only because everybody is talking about, you know, we may be in some economic downturn like a recession. You'll see a lot of big technology companies that have started laying off people. And so when a person is planning for you, an emergency fund is really important."
As for spending cash, Shen says, "So suppose you've said a certain amount of cash allowance for your grocery shopping and maybe just some entertainment that you can out and with all these expenses, just using cash instead of credit cards. And once ,you know that a pile of money is gone, you probably know you cannot do anything else."
Also before you try a debt consolidation company, Shen warns to do your research because it might be a potential scam.