Reaching six figures is no easy feat. If you’re one of the hard-working few who have made it to this milestone, give yourself a pat on the back and celebrate. It can be tempting to feel like now that you’ve made it to the top of this mountain your financial worries are over. But before you go reaching for a bottle of champagne or calling a Ferrari dealer, consider this: the majority of Americans living paycheck to paycheck are from higher income households. In fact, out of 9 million Americans surveyed, 8 million of those are in higher income brackets.1

Now it’s more important than ever to take an active role in managing your money. Don’t equate earning six-figures with the ability to spend six-figures. Fortunately, there are several strategies that may help:

Steps to Take

There is no one-size-fits-all strategy for maximizing your new six-figure income. Every person is different, and some suggestions may mean more to you than others. But there are tried-and-true methods that can help point you in the right direction when it comes to your financial health.

Review Your Budget

Now that you are making six figures, you may be tempted to never look at your budget again. Resist this temptation and go back over your budget to make sure your spending is based on your overall approach. Feel free to adjust your line items to match any new priorities without going overboard. Careful preparation may help you know how much you can consider spending on that splurge item that you found online. Your renewed budget should be designed to follow your other new goals, knowing that your day-to-day matters are on firm footing.2

Target Unproductive Debt

Not all debt is bad, as much of it helps you both financially and in terms of your quality of life. But certain types of debt, like credit cards and personal loans, may be something you want to manage better. Set a goal for your unproductive debt, which may put you in a better overall financial position. Each penny you save can go toward other goals, such as vacations, travel or even retirement.

Build Your Emergency Fund

Life is full of the unexpected. Prepare by setting aside enough liquid money to cover three to six months of expenses. This reserve may help you manage through a job loss or an injury or illness that requires time to heal.

Don’t Forget About Taxes

Now that you’ve entered a new income bracket, your tax obligations may have changed. Take time to review your tax situation in an effort to avoid year-end surprises. This article is for informational purposes only and is not a replacement for real-life advice, so be sure to consult a tax, accounting, or human resource professional before modifying your tax-withholding strategy.

Don’t Forget Your Retirement Plans

If you haven’t started planning for retirement, your new income level may allow you to start setting aside money using a company-sponsored retirement plan. Initially, a financial professional may be able to provide guidance concerning the role a retirement plan can play in your overall financial strategy.

Move Forward Confidently

Restructuring your budget, managing debt, creating an emergency fund, and beginning to consider retirement may help ensure a more comfortable financial future. Even at a six-figure income, proactive preparations can help position you such that your money will eventually work for you.

1. Pymnts.com, January 2023
2. Forbes.com, March 29, 2022

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Market Updates.

Overall, the economy has proven resilient and remains strong.

  • Gas prices have been slowly rising mainly due to OPEC (Organization of the Petroleum Exporting Countries) cutting petroleum production by one million barrels per day.
  • Russia and Saudi Arabia also extended their production cuts through the end of the year.
  • We may also experience temporary gas price increases due to Florida hurricanes, but as long as major refineries are not impacted, prices should bounce back.
  • Inflation rose less than expected over the last month by just 0.2% to the current rate of 3.2%.
  • Employment and job openings have dropped resulting in the unemployment rate rising to 3.8%.
  • Because the inflation rate remains higher than the Federal Reserve would like (3.2% compared to 2%), two more interest rate increases are expected. The Stock Market was down at the beginning of the month due to the latest interest rate increase, but the Market is now back up.

Sources

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Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Preparing for retirement can look a little different for women than it does for men. Although stereotypes are changing, women are still more likely to serve as caretakers than men are, meaning they may accumulate less income and benefits due to their time absent from the workforce. Research shows that 31% of women are currently or have been caregivers during their careers. Women who are working also tend to put less money aside for retirement. According to one report, women contribute 30% less to their retirement accounts than men.1,2

These numbers may seem overwhelming, but you don’t have to be a statistic. With a little foresight, you can start taking steps now, which may help you in the long run. Here are three steps to consider that may put you ahead of the curve.

1. Talk about money. Nowadays, discussing money is less taboo than it’s been in the past, and it’s crucial to taking control of your financial future. If you’re single, consider writing down your retirement goals and keeping them readily accessible. If you have a partner, make sure you are both on the same page regarding your retirement goals. The more comfortably you can talk about your future, the more confident you may be to make important decisions when they come up.

2. Be proactive about your retirement. Do you have clear, defined goals for what you want your retirement to look like? And do you know where your retirement accounts stand today? Being proactive with your retirement accounts allows you to create a goal-oriented roadmap. It may also help you adapt when necessary and continue your journey regardless of things like relationship status or market fluctuations.

3. Make room for your future in your budget. Adjust your budget to allow for retirement savings, just as you would for a new home or your dream vacation. Like any of your other financial goals, you may find it beneficial to review your retirement goals on a regular basis to make sure you’re on track.

Retirement may look a little different for women, but with the right strategies – and support – you’ll be able to live the retirement you’ve always dreamed of.

1. Transamerica.com, 2021
2. GAO.gov, 2021
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

What has upswings and downturns, troughs, peaks, and plateaus? Though such terms could easily describe a roller coaster ride, they are also commonly used to describe the business cycle.

The business cycle – also known as the economic cycle – refers to fluctuations in economic activity over several months or years. Tracking the cycle helps professionals forecast the direction of the economy. The National Bureau of Economic Research makes official declarations about the economic cycle based on specific factors, including the growth of the gross domestic product, household income, and employment rates.

Recovery & Recession

Business

An upswing, or recovery, occurs when the economic indicators improve over time. A recession occurs when the same indicators go through a contraction. A particularly long or severe recession is referred to as a depression.

Despite being called a cycle, it’s important to understand that the business cycle is not regular or even cyclical. Its pattern resembles the movement of waves, and those waves don’t consistently undulate at set, periodic intervals. Some recoveries have lasted several years, while others are measured in months. Recessions, too, can last for a number of years or be as short as a few months.

Moving in Waves

Moving in Waves

Stages of Cycle

So, how should investors look at information about the business cycle?

Investors who understand that the economy moves through periods of recovery and recession may have a better perspective on the overall cycle. During recovery, understanding whether the economy is at an early or late stage of the cycle may influence certain investment decisions. Conversely, during a recession, deciphering whether the economy is passing through a shallow or deep cycle may be influential as well.

The business cycle will transition from recovery to recession – and recession to recovery – over several months. Understanding that the economy travels through cycles may help you put current business conditions in better perspective.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Market Updates

  • Overall, the economy continues to be strong and resilient.
  • A recent Jobs Report from the U.S. Bureau of Labor Statistics showed 339,000 jobs added and that the unemployment rate rose to 3.7%. It is interesting to note that the jobless rate is both the highest it’s been since October 2022 and near the lowest since 1969.
  • The U.S. Debt Ceiling deal was reached, which includes suspending a limit until 2025 and an increase in the debt ceiling.
  • The Stock Market has seen some successes recently, notably in the tech sector. The NASDAQ has now been on the rise for six consecutive weeks.
  • With inflation still higher than desired, the Federal Reserve is expected to raise interest rates again in July.
  • Despite the increase of interest rates ten time over the last year, consumers seem to be optimistic based on spending reports.
  • We still haven’t seen a marked increase in gas prices, though they may go up later this summer. Saudi Arabia announced a plan to cut oil output in July, which could potentially affect prices.

As these updates indicate, the economy is not always predictable. If you’ve been keeping up with “Ask Triangle” on a monthly basis, you’ve likely noticed a few unexpected outcomes from previous predictions. That’s why our team places value on diversified portfolios, which helps us to proactively manage risk and increase stability in a volatile market.

Ask Triangle Question

Q: Are there any updates to you’re hearing about a recession, such as timing and depth?

A: Based on May meeting minutes from the Federal Reserving, a recession is still anticipated sometime in the fall or early winter. Fortunately, it is expected to be a shallow recession. It’s worth noting that the timing of when the recession is expected continues to be pushed further into the future. The uncertainty around timing is likely related to the surprisingly resilient market and consumer optimism, despite inflation and the constant interest rate increase from the Federal Reserve.

In preparation for the possibility of a recession, let us know if you’d like to re-evaluate any or all of the following:

  • Cash-flow needs and distribution methods
  • Emergency savings, and how to build some
  • Other concerns around financial stability in an uncertain economic outlook

Our goal as your financial advisory team is to help you navigate uncertain times like these. Please don’t hesitate to reach out to us for any reason or concern!

Sources

Join us for the next Ask Triangle on Friday, July 7th!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates

  • According to the recent U.S. Bureau of Labor Statistics (BLS) Employment Situation Summery for April, the economy continues to be strong with unemployment low at 3.4% and job growth reaching 253,000. In particular, the leisure and hospitality industry has seen an upward trend in employment as consumers spend more on travel and hotel stays, also a positive sign for the current economy.
  • The Federal Reserve again raised interest rates in April from 5% to 5.25%. In June, rates are likely to rise again in an effort to decrease inflation from the April Consumer Price Index (CPI) report of 5% down to 2%.
  • On May 9, Federal Reserve President John Williams spoke to the New York Economic Club sharing that interest rates may continue to rise and that getting the CPI back to 2% could take as long as two years.
  • While there are still conflicting opinions, there is a general consensus that some level of recession can be expected by fall. Considering continued job growth and economic resilience despite increasing inflation and interest rates, a recession is likely to be smaller in scale.
  • Surprisingly, oil prices are lower than expected despite supply cuts by OPEC+ producers. This is considered to be due in part to lower demand as China reopens their oil production. However, warmer summer weather typically increases travel and demand, which will likely result in higher gas prices.


Sources

Join us for the next Ask Triangle!
Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

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