Improve Your Financial Health Now By Making These 5 Moves
Entrepreneurs should pay down their debt or lower their taxes whether the economic outlook is rough or not.
It's been a wild economic ride in recent months. Many entrepreneurs and small business owners have gone into "protection" mode in order to protect their financial health -- or at the very least put themselves in a stronger position to withstand a potential economic downturn.
In volatile economic times it can be even harder for entrepreneurs to endure nagging anxiety about their financial future. More than that, it's tough to change financial habits, adjust long-term goals, and deal with unexpected expenses during such volatility.
But, there's a lot you can do to make your financial situation more secure, whether in a recession or not. Here are five power moves you can make that will help keep your personal finances healthy.
1. Pay down debt.
Reducing your personal debt load and increasing your credit score is a high-priority financial goal these days. But, this is sensible in just about any economy. These days, however, given the uncertainty surrounding interest rates, getting out of debt is even more important.
Financial advisors recommend various strategies and plans for debt payments. You can use any strategy that works best for you, as long as you're consistent with it. However, it makes sense generally to focus on the debt with the highest interest rates. That tends to be consumer credit card debt.
As you successfully pay off a specific debt account, put the money you formerly paid to that creditor to good use. Many people use the "snowball" method and add it to the payment for the next creditor. Once you've eliminated high-interest rate debt, you can put that monthly cash towards an emergency fund, savings account, or more investments.
2. Make smart investments.
Have you made investments in stocks, whether in an individual bank account, a mutual fund or retirement account? Many people don't, and that's a mistake right now. Start small by signing up for one of the new apps that round up debit card purchase amounts and invest the excess for you.
If you do already invest, it's a good time to review and refine your retirement plans and make additional contributions to your accounts. Check with your CPA to find out what impact this will have on your taxes (see the next section). Also, increase the amount of your contribution each year so your fund at least keeps up with the rate of inflation....