Money Management

Worried about losing your job? Read on to see how to protect yourself. [[{“value”:”

The U.S. economy is in a good place right now. Unemployment is low, and while borrowing costs are high on the heels of the Federal Reserve’s numerous interest rate hikes, savings account and CD rates are strong.

Despite this, many people are worried about the economy — and about the idea of losing their jobs. Data from Clarify Capital finds that almost 1 in 3 Americans are experiencing layoff anxiety this year. And that’s a horrible feeling.

In some cases, that fear, unfortunately, may be warranted. If your company has already announced layoff plans, it’s easy to see why you’d be walking around just waiting to be let go. But even if you don’t have a specific reason to believe that your job is on the line, news reports of layoffs and rumors may be enough to mess with your mind.

The good news, though, is that there are steps you can take to ease your layoff anxiety. Here are three to take immediately if you’re feeling perpetually stressed over the idea of losing your job.

1. Make sure your emergency fund is fully loaded

Likely the scariest thing about getting laid off is losing the paycheck your job provides. But if you have enough money in savings to pay your bills for a period in the absence of a paycheck, you might feel less worried about the potential for job loss.

At a minimum, you should try to have enough money in your emergency fund to cover three full months of essential expenses. The logic here is that it might take 90 days to find a job after losing yours.

If you don’t have a complete emergency fund now, focus on trying to add to your cash pile. If you focus your energy on that, it might leave you with less time to actively worry about your job going away.

2. Make certain your resume is up to date

If you’re let go by your employer, you may want to start job hunting right away. And it may give you comfort to know that your resume is up to date.

Spend some time reading through that document and making changes as necessary. Remember, if you’ve been working full-time for a number of years, you probably don’t have to list your summer job experience from college anymore. Rather, focus on your recently acquired skills and accomplishments.

3. Make sure your skills are current

You may be in a field where you need to maintain certain skills and licenses to do your job or advance your career. If you’re worried about layoffs, make sure those skills and licenses are current. You wouldn’t want an expired certification to be the reason you’re denied a replacement job in the event that yours goes away.

Also, you may want to look at growing some new skills in case you end up having to interview for jobs. In that regard, you can look to learn some skills that are specific to your industry, or you could look to grow your soft skills, which are those that apply to pretty much any job. These include communication skills and organizational skills.

The idea of losing a job can be frightening. But rather than give into that anxiety, take active steps to put yourself in a better position to get through a layoff should that become your unwanted reality.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Savings accounts come with some great perks, but there’s one big drawback to know about. Learn how it could make an impact in the current economic climate. [[{“value”:”

Savings accounts can be a good place to keep your money because they are risk-free. If you choose an FDIC-insured account, you can be confident your money will be available when you need it. Although there may be some monthly withdrawal limits, you can also access your money when you want it.

Right now, savings accounts are paying a pretty generous rate of return. While the national average savings account rate is just 0.46%, many accounts offer yields upward of 5.00%. Unfortunately, despite these benefits, there is a downside of this kind of financial account — and it’s one you should care more about now than ever.

Savings account interest rates are variable

The big downside of savings accounts is that the rates they offer are variable. They are typically not set in stone or guaranteed to last for any set period of time. You could open a savings account today earning 5.00% and if market conditions change, could find yourself with an account paying 0.05% APY instead. There would be nothing you could do to stop that from happening, if the bank followed its terms and conditions when setting rates.

Because savings account rates are variable, the generous yields being offered right now are absolutely not guaranteed to last. Rates are high right now because the Federal Reserve repeatedly raised interest rates in 2022 and 2023 to fight the inflation caused by the pandemic, and consumer rates are linked. But many experts predict that rates will fall this year, and your savings account rate could in turn end up being much lower than what you’re getting now.

In 2019, before COVID-19, some of the best high-yield savings accounts offered rates of around 2.00% to 2.50%. During the pandemic, those rates fell even further and ended up being less than half that amount (even for high-yield accounts). Depending on how far rates fall, it’s entirely possible that savings account yields could go back down to the 2.00% to 2.50% range in the coming years.

So, while you may be excited about earning a virtually risk-free 4.00% or 5.00% right now, don’t count on this lasting.

Do you have any alternatives to a savings account?

If you’re frustrated by the fact that the variable yields on savings accounts could soon mean you earn less on your funds, you do have an alternative to consider: a certificate of deposit (CD).

CDs tend to offer even higher yields than savings accounts do. And each CD you open will have a set term (usually between three months and five years). During that term, you’re guaranteed to get paid the rate you were promised when you signed up. So, if you choose a 10-month CD offering a 5.10% APY and rates fall five months from now, you’d still get that 5.10% for the entire 10 months your money is invested — unlike if you had a savings account.

Now, you have to agree to keep your money invested for the duration of the CD term to avoid penalties — that’s the big downside of using a CD instead of a savings account. But if you’re saving for a goal that you’re a few months or a few years away from — like buying a house in three years — then putting that money into a 3-year CD could help you ensure you get to keep earning at today’s higher rates.

It’s at least worth considering a CD, since that variable rate used by savings accounts could be a real disadvantage if rates soon fall.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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“Live on a budget” is common financial advice. But keep reading to learn why one writer is opting out of budgeting. [[{“value”:”

When you read personal finance advice on the internet, you’re often told to make and live on a budget. And in some cases, this is good advice — especially if you’re really struggling with your finances or if you’re just getting started with money management.

For me, though, I will never budget again — and there are some very good reasons for that. The reasons I have for not budgeting may apply to many other people as well, and they show why there’s more than one way to grow your net worth and ensure you’re using your money wisely.

Here’s why I’ve sworn off budgeting for good — and why you may want to as well.

1. Budgeting often doesn’t work very well

Almost no one likes budgeting. Many people simply don’t want to sit down and give every dollar a job. And even people with a budget often can’t follow it. In fact, more than 8 out of 10 people who have a budget admit to blowing it and overspending.

Even as a financial writer, I’ve always been bad at following budgets. It’s too hard to predict exactly what I’ll want to spend on at any given time. And, it’s annoying and challenging to constantly feel as if you have to deprive yourself just to stick with a budget. It’s like a crash diet that inevitably leads to binge eating.

Since I got tired of making budgets I didn’t follow, I tried a different approach instead. I limited my fixed or ongoing costs by not committing to a large mortgage or car payment. I automated my savings so money for my goals automatically transfers to retirement and savings accounts. And now, I just spend the rest of my money guilt free.

This has worked far better than budgeting because I don’t have to choose to save — it just happens automatically. And I don’t have to try to juggle numbers, moving my grocery money to my entertainment money if I want to spend extra on concert tickets one month. I just know I can spend the money in my checking account on whatever I want, and I don’t have to follow rigid categories.

If you are tired of blowing your budget, try to automate your finances instead. Aim to keep fixed costs below 50% of the income you bring in, try to save around 15% to 20%, and take care of these expenses first. Then, enjoy what you have left.

2. Focusing on limiting spending isn’t the best mindset

I also gave up on budgeting for another important reason. Focusing on spending costs creates a scarcity mindset and can be very limiting, since there are only so many spending cuts you can make. Rather than obsessing about whether I’m devoting too much money to store-bought coffee or dining out, I focused on increasing my income instead.

There’s no real limit to how much more you can make if you develop your job skills, start a side business or side hustle, or look for other earning opportunities. And if you can increase your income, it becomes a lot easier to effortlessly live within your means — which is what happened to me.

If you can automate your finances and focus on earning more over time, you shouldn’t have to budget ever again, either. If you’re tired of trying to live on your limited dollars and feeling stressed about the process, give these techniques a try and see if they work better for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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