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Inflation and an Economic Slowdown: A Double Whammy for your Finances
Newspapers and media reports have been filled with talk of inflation and recession. Experts are arguing about the definition of the latter. Pundits are pondering whether the slow down reflected in the latest consumer price index report means that inflation has peaked. You, in the meantime, are still staring in disbelief at the numbers that are rolling by as you fill your tank with gas or the total tally when you buy a few bags of groceries.
Are We in a Recession?
It really doesn’t matter what anyone calls the nation’s economic condition when you’re having trouble paying your household bills – or worrying that’s where you’ll find yourself soon. Though gas prices have been dropping steadily and retailers like Walmart, and Home Depot are reporting strong financial results, there is some concern that higher prices may be driving their gains, and there is only so long that consumers will be able to maintain their spending habits.
That diminished spending on goods and services is one of the top signs of recession, along with cuts in manufacturing and production, increases in unemployment, and stagnating or dropping income. As frightening as each of these elements sounds, it is when you personally experience a combination of them that you feel a real impact. The good news is that there are steps you can take to prepare.
Can You Recession-Proof Yourself?
Recessions impact everybody one way or another, but they are definitely more painful for those who aren’t prepared. Here are a few things that you can do to minimize the financial impact on your family:
Review your financial plan. If you have been investing, now is the time to take a look at your short- and long-term goals and weigh them against the potential of a shifting economy. If you have too much money in one particular investment, now might be a good time to diversify, and if you are anticipating needing to take a significant amount of cash out in the short term, it’s a good idea to make sure that your investments aren’t particularly vulnerable to market volatility.
Take a close look at your spending and make adjustments. We all give ourselves a bit of grace when it comes to our budgets, but if you have reason to believe that rising prices are going to do more than make you wince, now is a good time to analyze what you’re spending on and see what you can eliminate or cut down on. Refinancing loans, canceling subscriptions, and being a bit more frugal in your habits are just a few examples of things that can make a big difference.
Have a contingency plan, and the savings to back it up. Do you have an emergency savings fund? Is there enough in it? Most experts advise calculating your monthly expenses and then putting away at least three times that amount to carry you through a job loss or some other economic crisis.
Pay down debt. If you are carrying credit card debt, or have any other loans that are charging you high-interest rates, double down on paying them off. It may hurt to skip a luxury in favor of putting more into paying down your debt, but if you face a job cutback, you’ll be glad for every dollar less that you owe.
Find extra income. It may sound more easily said than done, but if you can find a way to earn some money on the side, it will cut into the impact that rising prices are having on your lifestyle – or help you pay down debt or boost your savings.
The good news is that most recessions end in less than a year. We’ve been here before and we’ll get through it again, but that doesn’t mean that it will be easy. If you need financial advice to help you navigate the challenge, contact our office today to set up an appointment.
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Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)
Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
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