Last week, the unemployment rate dropped to 3.9%, the lowest it’s been since at least 2008, and probably longer… that means that just about anyone who wants a job has one and some employers either can’t fill positions or they can’t keep them filled. Wages are even beginning to rise as the economy continues to pick up speed.
But don’t let the current uptick fool you – there will be a downtick. Things will get tight again. The economy is cyclical in nature, so for every few years of a robust, growing economy, expect that there will be a few lean years, as well, especially as spending continues to increase faster than wage growth.
Are you ready for that downturn? Are you saving money for that rainy day that we all know is coming? If you’re like many Americans, we tend to assume that a booming economy will last for many years, so we put off saving money in favor of spending a little more on the things we want… we figure that we can start saving more next week or next year.
Sadly, that time often doesn’t come along, and when the bottom drops out, we find that we are not prepared for a sudden loss of income, such as job loss or a cutback in the hours that we work, or for those unexpected emergencies, like home or car repairs, and definitely not for retirement, which comes along a lot faster than you think!
So, what should you do? Well, obviously, you should save more rather than less, but the only way to actually do that is to sit down and create a plan. Tighten your budget for discretionary spending, have a little more money transferred to your retirement account each payday, or create an automatic withdrawal out of your paycheck for your emergency fund. But whatever you do, make sure that you don’t put it off until next month or next year, because the economy will change, and you must be ready.