The world economy over the past several years has not been good, to say the least. And planning for financial success in such an environment is no easy feat. But with jobs, the housing market, interest rates, and the overall economy improving, many people are beginning to think about investing in their future once again. It’s hard to invest when you’re struggling to stay afloat and there’s no stability in the economy, but once things start looking up, it’s time to start thinking about how you’re going to support yourself in the future. So how can you plan for the financial successes today that will help to support you in your twilight years? You need to understand the changing economy and what it means for you.
Unless you happen to be a financial planner or an economic expert, chances are good that you have only a basic understanding of how the economy functions and how it affects your life. You are probably aware of inflation, for example, because it means you’re spending more money, year after year, for the same goods and services. If you enjoy annual raises that compensate for cost-of-living increases, you probably don’t worry about inflation too much. But the number of people who enjoy this type of consistent wage increase is pretty small. Just look at the recent hike in California’s minimum wage last year. Sure it was a big increase ($1 per hour), but it came after six years with no increases. This sort of situation can make it difficult to plan for success. When costs increase, but your income doesn’t, how can you make every dollar amount to more?
Investing is an option, and there are myriad ways you can try to make your money work for you. Low interest rates and losses in the stock market have put a lot of people off investing over the past several years. But with the economy finally starting to rebound, you might want to start putting money into a 401K or other retirement accounts at the very least. And then there are options like CDs, stocks, bonds, mutual funds, and even Index Universal Life policies to consider. You’ll have to do some research to figure out which options best suit your investment goals, but if you want to realize financial success now and in the future, it is imperative that you combat inflation by increasing the value of every dollar you earn today.
All you have to do is look at the value of $1 from 2005 to 2015 to realize the impact of inflation, and you need to plan accordingly to compensate. Whether you do your own research online or you speak with a financial specialist, you should be able to figure out ways to make the money you earn today equate to more in the future. At the very least, you’ll want to account for inflation when planning how you’re going to live on a fixed income later in life. But you should also do all you can to surpass the inflation rate and get the most out of every dollar you earn.