Money Management

It’s an important data point to watch out for. 

U.S. consumers have pretty much spent all of 2022 grappling with rampant inflation. And over the past 12 months, many people have depleted their savings accounts and racked up scores of credit card debt to cope with higher living costs.

What’s made the past year even more difficult is that as inflation has surged, there’s been no federal stimulus aid to fall back on (though some states have issued their own payments to residents). The last round of federal stimulus checks to hit Americans’ bank accounts got approved in March of 2021, before inflation levels really started to rise.

But there’s a reason the federal government hasn’t issued more stimulus checks this year — it hasn’t needed to. And while that could change in 2023, it will hinge largely on one key number.

What does the jobless rate look like?

In March of 2021, the national unemployment rate was 6%. Of course, lawmakers approved a round of stimulus aid via the American Rescue Plan before that data was broadly released, but the jobless rate in February of 2021 was a notch higher at 6.2%.

By comparison, in February of 2020, right before the pandemic took hold, the unemployment rate was 3.5%. And for context, between February of 2019 and February of 2020, the national jobless rate ranged from 3.8% to 3.5%. Once the pandemic hit, the unemployment rate soared to 14.7% in April of 2020 before gradually creeping back downward.

When lawmakers made the decision to issue stimulus checks in March of 2021, the jobless rate was almost twice as high as it was right before the pandemic. But this year, unemployment has been low.

In January of 2022, unemployment sat at 4%. In July of 2022, it reached 3.5% — the same level as February of 2020, right before the pandemic. And in November of 2022, the jobless rate crept upward very mildly, reaching 3.7%.

All told, jobs have been plentiful this entire year. In fact, for added context, 2022’s jobless levels are pretty much the lowest on record over the past 20 years. And so it’s easy to see why lawmakers passed on offering up stimulus aid.

Now the unemployment situation could change in 2023 — especially if a recession strikes. But when it comes to stimulus aid, we’re going to need to see a pretty notable uptick in joblessness for lawmakers to justify another round of checks. And if the unemployment rate stays close to where it’s been in 2022, we can pretty much write off the idea of another federal windfall.

Don’t assume a stimulus is on the way

There’s reason to believe that economic conditions will, in fact, worsen in 2023. And we could see unemployment levels start to rise. But unless we see a large jump in the national jobless rate, lawmakers will probably hold off on issuing stimulus funds.

The last round of federal stimulus aid was met with loads of criticism. And since many have blamed this year’s inflation woes on last year’s stimulus policies, if anything, lawmakers will most probably err on the side of being conservative when it comes to sending out money. And so while there’s a chance that another stimulus check could be on the way in 2023, we’ll need to pay close attention to the national unemployment rate to see how likely that is.

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Make a point to tackle this key task in January. 

There are certain money moves it usually pays to make at the start of the year. For one thing, it’s wise to assess your emergency fund and see how equipped you are to tackle unplanned bills. You should also sit down and map out a budget that allows you to cover all of your expenses while meeting different savings goals.

But perhaps the first financial move you should make in early 2023 is to check your credit report. Here’s why.

See how things stand after the holidays

A lot of people tend to overspend on the holidays. You may be aware that you’re carrying some debt on your credit cards. But you may not realize just how much debt you’ve racked up. Looking at your credit report will give you a sense of whether your debt is likely to cause credit score damage, which is something you don’t want.

If you rack up credit card balances that amount to more than 30% of your total spending limit across your various credit cards, it could cause your credit score to take a dive. And that’s something your credit report can tell you.

Also, if you swiped your credit card more often during the holiday season or engaged in more financial transactions than usual, you may have potentially exposed yourself to fraud — not because you did something wrong, but because there are unfortunately just scammers everywhere. If you check your credit report and see suspicious activity, you’ll know to address it before the situation escalates.

For example, let’s say you notice a new line of credit listed on your credit report that you don’t recognize and are certain you never opened. That should be a red flag to follow up. If it turns out a criminal got access to your personal data and opened an account in your name, you’ll know to address that issue and nip the situation in the bud.

A move you don’t want to put off

In 2023, credit reports will be available for free on a weekly basis. That benefit was initiated during the pandemic and got extended to allow consumers to keep track of their credit.

Before you get too wrapped up in different 2023 goals and happenings, take the time to give your credit report a thorough read. And if anything looks off to you, don’t hesitate to investigate.

One thing you should know is that credit report errors are actually pretty common. So if you see something that doesn’t look right, it doesn’t automatically mean you’ve fallen victim to fraud. It could just be that the credit bureau that put together your report has made a mistake. But either way, that’s still a situation you’ll want to correct, and the sooner you do, the better.

Finally, if you’re planning to apply for a loan in 2023, whether to buy a car, a home, or something else, it’s really important to go in with good credit. If your credit report presents you as a borrowing candidate with lots of debts and a poor payment history, your chances of getting approved for a loan will shrink. Reading your credit report could be the push you need to improve your credit picture and put yourself in a better position to be able to borrow the way you want to.

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There’s no need to pay a premium for these common purchases. 

Some people will tell you that the items you buy at your local dollar store are apt to be of lesser quality than the items you’ll buy at a regular supermarket or big-box store. And the truth is, that’s questionable.

It’s easy to make the case that a toy you buy for $1 won’t hold up as well as a toy you buy at a regular store for $10. But there are certain dollar store items that definitely don’t warrant spending more than $1, or $1 and change. And so stocking up on the following essentials should really help you stretch your paycheck at a time when inflation has made living costs so unbearably high.

1. Gift bags

If you have kids, then your calendar is probably loaded with birthday parties for their classmates and friends. And you probably don’t have the time or patience to wrap gifts every weekend. That’s where gift bags come in.

Now if you go to the supermarket, you might spend $3 or more on a gift bag. And even big-box or craft stores might charge a lot more than $1. So you might as well purchase gift bags at the dollar store since, let’s face it — no one really cares about the bag so much as what’s inside it.

2. School supplies

If you’re a parent, you’re probably constantly restocking your school supply stockpile. And since kids have a tendency to lose things like glue sticks, tape, and markers, there’s no sense in paying extra for what may or may not be higher-quality items when they’re not likely to last very long. A better bet is to just purchase school supplies from the dollar store and call it a day.

Along these lines, if you’re a teacher tasked with stocking your own classroom, you might as well turn to your local dollar store. There’s no sense in spending more of your hard-earned money on things like extra crayons.

3. Party favors

Those birthday parties we talked about? Chances are, you’re going to get roped into hosting one. And if not, there may come a point when you need to send in party bags for a classroom event or celebration. In that case, buying small favors at the dollar store makes sense, since you’re likely purchasing a lot.

4. Greeting cards

It’s nice to acknowledge people’s birthdays and special events. But the cost of a single greeting card could easily exceed the $2 mark, which makes spreading good wishes needlessly expensive. A better bet is to buy your greeting cards from your local dollar store. Often, you’ll be able to get two cards for $1, not just one.

There are certain items you may want to buy at the supermarket or at a non-discount retail location. These include groceries, apparel, and housewares. But when it comes to the purchases above, there’s really no need to rack up a higher credit card tab than necessary. So if you have access to a dollar store, you should make it your go-to spot for these specific items.

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Do you have more or less money than your peers? 

Keeping money in a checking and savings account can give you financial stability. You can use the money in a checking account to pay the bills and cover your routine expenses. You can put money into a savings account for emergencies and for purchases you’ll need to make soon because the money is both safe and accessible there.

If you have money in these accounts, you may wonder how you’re doing at contributing to them relative to your peers. To find out, check out how your account balance compares to the typical American’s.

Do you have more or less money saved than your fellow Americans?

According to data from the U.S. Federal Reserve, the median combined account balance in checking and savings accounts was $5,300 as of 2019. Median is the middle number if everyone’s bank accounts were listed in order from ascending to descending.

The mean account balance, on the other hand, was $41,600. This is the overall average if you add up all the money in all of the accounts and divide that balance by the number of people with accounts. The mean is much higher than the median because people with very high account balances skew this upward.

To find out if you have more or less money in your bank account than your peers, you can sign into your checking and savings accounts and see what your current balance is. Although your balance is going to fluctuate over time as money comes in and goes out, you can get a pretty good idea of how much cash you have in your combined accounts.

How can you increase your account balances?

If you have less than your peers, you may wonder if you should work on increasing your balance. The answer depends on whether you need more money in savings and checking. Neither of these accounts tend to earn much interest, so if you won’t need the money in the next two to five years or so, it should be invested rather than put into either of these bank accounts.

If you want or need more money in your checking or savings account, there’s a number of ways to do it. One of the best solutions to build up a bigger bank account is to increase your income. That’s because you can earn an essentially unlimited amount if you put in the time and effort, while spending can only be reduced so far. You can take a look at your budget too, though, and look for ways to cut expenses so more money stays in your bank accounts instead of going out.

Ultimately, whether you have more or less than your peers, the important thing is to make sure you have enough in your checking and savings account to cover your bills and be prepared for emergencies life sends your way.

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Read this advice before you set your New Year’s resolutions. 

If you’re like most people, you’re probably thinking about New Year’s resolutions you want to make to try to improve your life as the new year dawns. And, chances are good, at least some of those resolutions probably have to do with your financial life.

Unfortunately, it’s very common for people to give up on New Year’s resolutions pretty soon into the start of a year.

If you don’t want that to be your fate, you may want to consider this advice from Suze Orman on how best to actually accomplish the financial objectives you’re setting for yourself. This advice can help whether those objectives center around saving more money, paying down your credit cards, or taking care of other key money-management tasks.

Here’s how Suze Orman thinks you can make your goals a reality

Suze Orman had a surprising suggestion for what you should do if you’ve been making a big list of financial goals you want to accomplish in the upcoming new year. Her advice: “Rip it up.”

This may seem like a strange suggestion from a finance expert who is dedicated to helping people improve their financial lives. But, Orman has a good explanation for the advice she gives.

As she explains, people often fail to follow up on their resolutions despite their good intentions. This means they end up feeling bad about themselves and focusing on their failures instead of trying to stay on track and achieve long-term success.

Instead of setting yourself up for disappointment, Orman instead advises that you take a different approach that’s more likely to pay off for you.

“Choose one financial goal to focus on,” she advised. “Don’t tell me you can handle more. Overloading yourself with a laundry list of goals is a recipe for frustration. Things slip through the cracks, you fall behind, and then you end up spending the rest of the year beating yourself up about everything you didn’t achieve.”

Orman suggests making that one goal something you’re passionate about doing, and something that will make a “maximum impact” on building the financial security you crave. While she acknowledges this will be different for everyone, the important thing is that the goal is a “nice step forward” towards ultimately improving your overall financial life.

Once you’ve chosen that one goal, she urges you to create a simple one-sentence mantra that you can remember and repeat to yourself in order to help you stay motivated all year long.

Is Orman right?

Orman’s advice is absolutely spot on. If you try to make too many small changes, it can easily become overwhelming. And once you start to fall behind at any one of your goals, that increases the chance you’ll become demoralized and just give up on the entire project.

Making lasting changes can take effort and time to form new habits. If you pick the one thing that’s going to make the biggest impact and you focus all your efforts on making that happen, you’re far more likely to be successful in the long run, since you can put all your energy into sticking with your plan.

As you see yourself making that one lasting change, you’re far more likely to keep at it all year long and end 2023 by celebrating your success.

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Putting your resume out there? Make sure to tackle these questions first. 

The start of a new year is a good time to look at switching jobs. January is when many hiring budgets tend to renew, so a company that may have needed to put a freeze on hiring at the end of 2022 may now be in a position to make job candidates an offer.

But if you’re going to try to find a new job in 2023, you’ll want to make sure the role you’re seeking is an improvement over your current one. And it’ll help to run through these questions before submitting applications or accepting an offer.

1. Why am I looking to leave my current job?

Maybe you’re looking to leave your existing job because you don’t like the work you do, or you’re tired of being stuck in a certain role. You’ll want to make sure any new job you get addresses those issues. If you have a lot of experience with data but have grown bored of analyzing it, getting a different job that has you looking at numbers and statistics all day may not be an improvement.

2. What’s my ideal role?

It’s not enough to think about the things that are wrong with your current role. It’ll also help to visualize what your perfect job looks like. What tasks are you filling your days with? What’s the work environment like? These are things you’ll want to think about so you wind up happy with your new position.

3. What income do I need to live comfortably?

Some people seek out new jobs so they can grow their earnings. But in some cases, getting a new job could mean having to take a pay cut. And that’s not necessarily a terrible thing. If earning less money allows you to take on a job that brings you more fulfillment, that lower paycheck may be worth it.

But first, you’ll need to assess your basic expenses to make sure that if you do take a pay cut, you can still manage your bills comfortably. So comb through your bank account and credit card statements from the past year and see what you’re spending on average. That should help you arrive at a minimum salary requirement.

4. What benefits should I be seeking out?

It’s not just your income you’ll need to think about when applying for a new job. You’ll also want to make sure the benefits are decent. To that end, make a list of the workplace perks you want to go after, like paid time off, a retirement plan, and subsidized health insurance.

5. Do I want a flexible work schedule?

Maybe you prefer a job that lets you work from home several days a week. Or maybe you don’t mind coming to the office at preset hours every day because you thrive on that sort of structure. Think about what you want your schedule to look like with a new job. That could help you narrow down your choices — or rule out companies that aren’t as flexible as you’d like.

A new job could do a lot for you. But if you’re taking that leap, it’s important to find a new job you really end up thriving in. And addressing these questions could help you do just that.

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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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