If you’ve been wondering about the potential impact of tariffs on your personal finances, you are not alone. With tariffs dominating headlines, it’s bound to be a topic on everyone’s minds these days.
What exactly are tariffs? They are essentially taxes imposed on imported goods. While it’s true we haven’t seen tariffs like these in the U.S. for about 100 years, it’s important to remember that in a volatile market, things are constantly changing. Try to maintain a long-term perspective. It’s smart not to rush into making major decisions with personal or financial business matters.
Ongoing tariffs could lead to higher inflation, which would mean an increase in the cost of goods. Facing uncertainty can cause stress and financial anxiety, but there are a few things you can do to take control of your finances. Whether the economic market is stable or volatile, it’s always a good time to review your budget and bolster your emergency savings account! Read on for more tips.
Revisit your budget
Prepare for your future with a savings plan. A good rule of thumb for an emergency savings account is to put away at least three months’ worth of expenses. To start, check out our resources for a budget calculator or create a spreadsheet (you can download an app for this, or just use Google Sheets or Microsoft Excel). On the far left, write out your monthly expenses. These might include mortgage/rent, car payments, utility bills, insurance, groceries, or “going out” money. On the right side, type in the amount you spend on each. Add them all to create a total. Ensure your income exceeds your expenses and take note of areas where you could spend less.
One method is the 50/30/20 rule. This approach means devoting 50% of your after-tax income to necessities, 30% to wants, and 20% to savings or debt payments. Conversely, in times of inflation, a 60/30/10 rule might make more sense (60% to necessities, 30% to wants, 10% to savings).
Consider making larger purchases now (such as a new car or truck)
Kelley Blue Book suggests that now is a good time to buy if you are already in the market, as new car prices are holding steady and used car prices may be rising. Conversely, don’t rush into a decision if you are not already in the market.
If you do decide to make a new car purchase, make sure you have a reasonable interest rate so you are not paying a stiff price monthly. You can explore our auto rates here.
Review your retirement savings account (and consider diversifying) ...
It’s always a good idea to review your accounts and make sure they still align with your short- and long-term financial goals. Diversifying is a safe idea, as it reduces risk.
For your 401k, it might be a prime opportunity to rebalance your target allocation. During an uncertain economic period, your portfolio can shift due to stock prices falling. Be sure to keep your process consistent and objective.
...But avoid making major portfolio changes
Be cautious of making sudden changes or big financial decisions without careful consideration and planning. Don’t participate in any panic!
Bolster emergency funds
A financial safety net can bring ease of mind. First, determine how much you can set aside each month, based on your budget. Another tip is to automate your savings. This means you won’t have to think about setting money aside each month. With The Power of Change®, round up those purchases to the nearest dollar, then place the change wherever you need it most. If you can, put your money in an account that accrues interest. For instance, a savings account with a high interest rate would be ideal. As an additional safety net, our Personal Loans can help you tackle unexpected repairs, make home improvements, or handle other larger expenses with low interest rates and flexible terms. You can apply online in minutes.
Stay calm
Control what you can control. The economic market is larger than us, but what you do with your money is up to you. For the most part, we recommend “staying the course.”
Credit unions are widely considered more safe and secure than banks in times of financial crises or elevated recession risks. Having your money in a stable, member-focused institution like Nusenda Credit Union is a sound decision. Credit unions tend to take fewer financial risks than banks, practice more risk-averse conservative policies, and generally serve individual members and small businesses (rather than larger entities). Like banks, your deposits are insured up to $250,000 by the National Credit Union Administration (NCUA), so you can rest assured that your money is protected, even in times of economic uncertainty.
Nusenda Credit Union is dedicated to helping members navigate economic uncertainty. We have always been invested in our members' long-term financial health, and that’s not going to change.
At Nusenda Credit Union, we’re dedicated to improving our members’ financial well-being and supporting them through affordable products, friendly service, community involvement, and financial education. We’d love to find ways to help you save money. You can reach us at 505-889-7755 (800-347-2838 outside the Albuquerque area) or make an appointment to meet with us at any of our branch locations.