While 2018 was a good year for many — with relevantly high consumer sentiment across the board and record high stock market gains — despite a few jitters along the way, you never know what a new year could bring, especially with talks of a possible recession looming, experts warn.
JPMorgan Chase recently found the U.S. economy has a greater than 50-50 chance of tipping into a recession in the next two years, with the odds climbing to higher than 80 percent over the next three years.
Whether you believe a recession is looming or not, many financial experts warn you should always be smart about your finances just in case.
Chris Whitlow, CEO of financial wellness provider Edukate, says that the start of every year is a great time to reassess your financial plans — and make new goals and moves for the year ahead.
Here are Whitlow’s top nine money moves to make in 2019.
1. Increase your 401(k) Contributions
Most people who invest through their company’s 401(k) like to set it and forget it. Unfortunately, if you don’t actively adjust your contribution amount every year, you can start to lose momentum as you prepare for retirement. You should increase your contribution amounts every year to at least keep pace with inflation rates. As you get older, you have to contribute more to maintain the same rate of return. Compound interest is less effective on new investments as you near retirement age.
2. Create an Emergency Fund
Even with the prevalence of financial resources, apps and tools, many Americans are still struggling to put money into an emergency fund. More than 50 million Americans don’t have any emergency savings. In fact, many still turn to credit cards or short-term loans to pay for emergencies. As the potential for a recession increases, 2019 should be the year that you create and buffer your emergency fund.
3. Check Up On Your Investments
Even if you’re contributing to a retirement plan and increasing your annual contributions to stay on track for retirement, you’re potentially leaving money on the table by not checking your investment portfolio regularly. As your goals change and you get closer to retirement age, your investments should reflect your goals. Younger people tend to invest in riskier stock options to maximize their returns long term, while those closer to retirement are generally more conservative. Over time, fees and fund objectives may change, so checking in every few months to make sure your funds are still aligned with your goals is important.
4. Live Within Your Means
Frugality and minimalism trends in recent years have reached the cultural mainstream. Living within your means is no longer just a trendy catchphrase; it’s become a necessity. With many Americans carrying tens of thousands of dollars in debt, living within your means should be part of your 2019 financial plan. Keep your bills low and try not to buy things you don’t need.
5. Don’t Ride Stock Market Waves
2018 was a great year for the stock market. Tax cuts and changes to the business climate helped businesses post record gains. Many casual investors tried to ride the wave of market swings and make a quick buck. Unfortunately, when seemingly quick wins like bitcoin came onto the scene, casual investors jumped on board to try and make some fast cash. Unfortunately, if you invested in bitcoin this year, you may have lost big when the cryptocurrency market collapsed. Stick to what you know and don’t overstretch your finances trying to predict the stock market. Investing is a long-term strategy.
6. Check for Cheaper Prescriptions
While the prescriptions you get from your doctor are designed to help you feel better, they may be hurting your wallet. Prescription drug markups on name brand medications can be hundreds of dollars more than their generic equivalents. Even the drugstore you pick up your prescription at could affect how much you pay. Shop around at different pharmacies and look for different generics to maximize your savings.
7. Avoid Buying Gas Guzzling Cars
GM and Ford both recently announced that they were cutting back on the production of sedans and small cars because their profit margins were much higher on trucks and SUVs. While their long-term plans remain committed to electric vehicles, buying a gas guzzler in the short term may hit your pocketbook over time. If you commute to work, the fuel costs of a larger vehicle can add up quickly. Rushing out to buy a new truck because of their popularity may cost you long term, even as gas prices are continuing to fall.
8. Shop Around for Insurance
Just like with your long-term investments, you should review your costs for life’s everyday expenses. Car insurance is no different. Instead of simply renewing your existing coverage, see if you can get a safe-driver discount or a discount for having multiple family members on the same plan. Different insurers also offer annual promos or discounts for first-time customers or those who switch from a competitor. Take a few hours before your new policy renews to see if you can find a better deal.
9. Get a Side Hustle Going
2019 is the perfect time to get a side hustle. If you’re trying to add some money to an emergency fund or save up for a vacation, there’s plenty of opportunity out there. From selling things you find around the house on eBay, to driving for a ride-sharing company, to picking up seasonal work with a local retailer, there are plenty of ways to make some extra money in 2019.