Financial expectations for the second half of the year
We’ve reached the midway point of 2022, and it’s time to check in with your financial goals. Local financial professional Barry Bigelow shares what has impacted our money so far and what to expect for the rest of 2022.
We’ve seen the Federal Reserve continue to raise interest rates. These rate increases have caused both mortgage and student loan interest rates to go up, making it more expensive to borrow money. From the gas pump to the grocery store, inflation continues to have an impact on the prices of goods and services. We’ve also seen stock market volatility as Wall Street responds to the interest rate and inflation updates. It’s important to remember the United States is also part of a global economy too, and sanctions introduced to different countries earlier this year also impact global markets.
Any major financial movement is always concerning but we’ve found when you have plans that account for the good, bad and ugly, you are more likely to be prepared to handle the potential impact current events may have on your investments. A plan removes anxiety when we see movement like this because we have already built a strategy that accounts for downturns and increased inflation.
Take inventory of your lifestyle halfway through the year. With costs of goods and services increasing with inflation, compare and contrast your current bills and expenses with your bank statements from six months to a year ago. Understand where you are spending more money and look for ways to cut back if you find you have more money going out than coming in each month. Then look at the savings goals you set for yourself at the beginning of the year. Are you still putting money into your retirement accounts? Could you be putting more into your 401(k)? With the market volatility we’ve seen, it may make sense to invest more in your financial future. If you follow the “buy low, sell high” motto, you could get into the market at a potential discount and grow that money over time with the power of compounding interest at a faster rate than you would letting that money sit in a traditional savings account.
Adjust Your Withholding. If you were surprised by having to pay in at tax time this year, make necessary changes and pay in more year-round by adjusting your withholding. Take the time to think strategically now about your tax situation. Ideally, you want to have just enough withheld so your refund is as close to zero as possible. You can file all withholding adjustments with a W-4 form through your employer.
The unknown can cause us a lot of stress, and having some money set aside for the future can ease our minds. An emergency fund is a separate liquid account that has 3-6 months’ worth of expenses set aside. It can be used for an unexpected job loss or untimely expenses. Remember, if you use part of your emergency fund, you need to replace it. Starting an emergency fund doesn’t take much; contributing $10 to $20 per paycheck is a great start.
There are still several consumer reports and price index updates expected through the end of the year. It’s important now, to prepare yourself for prices to continue to go up or stay the same through the end of the year. We haven’t seen a lot of improvement with the supply chain issues, and we are still experiencing shortages on several items. We also can’t expect prices to decrease rapidly. Although rising prices ramped up quickly, we can’t expect them to do the same on the way down. If you have any questions about what you can do to maximize your money before the end of 2022, meet with a financial advisor. Or you can learn more and remain up to date on the latest financial headlines by following Great Waters Financial on Facebook and LinkedIn.