According to a recent Pew Research survey, U.S. consumers’ assessment of their personal financial situations has changed very little since the beginning of the economic recovery in 2009. One piece of explanatory data comes from the Bureau of Economic Analysis, which reported a meager 3.2 percent growth in per-capita disposable personal income (or your personal income after taxes) over the 5-year period. In fact, the current recovery’s disposable personal income growth rate is the lowest of any economic recovery in the U.S. since the 1960s.
Even if you are one of the many consumers whose financial (or career) expectations haven’t been met by the current economic recovery, plenty of opportunities still exist to take advantage of the time and hone your personal finances. Here are a few:
Continue to Pay Off Student Debt
The majority of young-adult (ages 20 to 40) households with student debt have less than $10,000 of it. However, the New York Times reports that at 4 percent in 2010, “the share of income that a typical student debtor has to devote to loan payments is only marginally higher than it was in the early 1990s.” Though you may not have a lot of money to devote to your student loans, even $50 or $100 each month would help establish the direction of your finances towards the elimination of debt (as opposed to its accumulation).
Finish Your College Degree
If you took out loans to begin college and walked away before receiving a degree, you may want to consider returning to finish the necessary coursework. The income gap is widening between those with a college degree and those without, and you could increase your employment opportunities and future earning potential by completing the degree.
Plan for a Financial Emergency
Even if you think you are in line to receive a raise or promotion, it is a wise idea to be financially prepared for a pay cut, layoff, or other monetary pitfall. Saving up three to six months’ worth of income in a bank account may seem tedious, but it is a healthy financial practice, and a great way to avoid having to take on emergency debt in an adverse circumstance. Checking your financial institution’s health, especially to make sure your funds are federally insured, is also a part of planning for an emergency. In some instances of bank failure, even if your funds are insured, it can take days and even weeks to receive them – it would be best to avoid the risk of those instances altogether with your emergency funds.
Pick Up a Side Job or Two
A weaker than expected jobs recovery has contributed to a host of creative employment ideas in the “sharing economy.” Uber, Instacart, and TaskRabbit are examples of companies that connect consumers in order to create mutually beneficial transactions, such as grocery delivery or car rides. Odd jobs abound in this economy, especially as full-time work becomes scarcer. Developing another source of income that would require minimal ongoing commitment is a great way to create your own financial recovery.
The current economic recovery may not be an automatic boon for you financially, but you should still take advantage of the many ways to improve your personal finances and set yourself up for future success. The above suggestions may also help you weather another economic downturn and prepare you to better take advantage of the next recovery.
This article was written by Patrick Russo.