The economy has changed for most Americans over the past couple of years. The value of your home, your retirement account and even your job might not hold the same worth that they did just a few years ago. Recovery is on the way, but what should you be doing to protect your financial future?
1. The economy is improving, but that doesn’t mean the average consumer is out of the woods, does it?
Not at all. For one thing, most of us took a significant loss from the economic downturn, so even if we’ve managed to keep our head above water though the rough patch, we probably have some rebuilding to do. Besides, we should take it for granted that although the market and the economy is improving, we’re not back up to speed yet. Recovery isn’t a straight line; it might be “three steps forward, one step back” for a while yet. We’ll continue to make progress, but we won’t be back to normal overnight.
2. What should we be doing to protect ourselves?
Right now, every family should have a budget projecting into 2011. It doesn’t have to be extremely detailed, but it should account for your basic income and ordinary expenses, and allow yourself to have some fun on the way. Plan for emergencies, but try to have a little bit each month left over that goes into a savings account or is otherwise protected for the future. There’s no bad way to save money, so if you’re a little skittish about working the market or reinvesting in your mutual funds right now, there’s nothing wrong with tucking that money into its own account or a simple CD until it’s needed or you’re sure the market is stable again. It doesn’t need to be a lot of money, either. You just want to be sure you’re in the habit of saving after we’ve come through a lean time.
3. What about lost benefits? Many employers cut back on amenities like compensations for health insurance or other benefits. Will those come back now that things are settling down?
We can hope that employers who were forced to cut corners will reestablish their old benefits as soon as they can. In the meantime, maintain your stopgap measures and wait for the programs and benefits to be reactivated. Be careful with insurance coverage, especially. It’s not as if the employer will flip a switch and everything will be back to normal just like you left it. There will probably be some delay in activating the coverage, and you might need to hang on to the insurance you found on your own a little while longer to make sure you have the coverage you need with no slippage.
Also, it's important to be patient. Slashing at the employee benefits probably wasn't your boss' first choice, and there are other priorities to keep the company moving onward and upward. Most employers who have an interest in providing solid benefits for their valued employees know that those packages keep experienced workers on the job, so it's important to them to get the benefits back in place. Sometimes, that kind of re-investment takes time. As long as the company maintains a level of success, you'll get back to where you were.