When the economy feels uncertain — whether due to inflation, climbing interest rates, or rising cost of goods — your financial habits matter more than ever. Financial resilience isn’t just about how much you earn but how well you prepare, protect, and position your finances.
Here are five ways to strengthen your financial foundation and safeguard your finances.
1. Build or replenish your emergency fund.
An emergency savings account gives you a buffer when the unexpected happens. Whether it’s job loss, medical bills, or a surprise car repair — having one to three months of essential expenses set aside can prevent you from relying on high-interest credit cards. If you got a refund or are expecting a tax refund, consider directing a portion to kickstart or replenish your emergency fund. Using Turbotax can help ensure you’re getting the maximum refund you’re eligible for, whether you’re doing your taxes yourself or you have a tax expert do them for you.
2. Focus on your income.
Increasing your income by negotiating a raise, switching jobs, or starting a side hustle can give you more financial flexibility. But with more income may come added tax responsibilities especially if you’re self-employed. Side gigs or freelance work may require quarterly estimated payments and might open the door for business-related deductions. If you’re finding business tax rules overwhelming, TurboTax has experts to help with any self-employed guidance and get you potential deductions like home office expenses or mileage that can help reduce your taxable income and keep more money in your pocket.
3. Eliminate high-interest debt.
Paying off high-interest credit card debt can free up room in your budget for saving, investing, or tackling other goals. If you’re not sure where to start or if you’re getting the best rates, Credit Karma offers personalized insights on your credit profile to help compare loan and credit card options that may lower your interest rates or help consolidate your payments. While you can’t deduct credit card interest, if you have other types of debt like student or mortgage loans, you may be able to deduct related interest you paid.. Tackling debt strategically now can build long-term stability.
If you’re tackling multiple debts, consider a structured payoff strategy. Two popular approaches are the snowball and avalanche methods. The snowball method focuses on paying off your smallest balance first to help you build momentum. While the avalanche method tackles the debt with the highest interest rate first to save the most money over time. Pick an approach that will keep you motivated and consistent.
4. Be strategic with your spending.
Make intentional choices by tracking and trimming your spending. This doesn’t have to mean cutting all the joy from your budget. Practicing good financial hygiene, like regularly reassessing your recurring expenses, can help you spot areas to free up cash and redirect toward your goals. If you have a small business or do freelance work, take note of expenses that can count as a business deduction like a percentage of your internet bill or business-related purchases for easier filing at tax time.
5. Invest with intention.
Investing in tax-advantaged accounts like a traditional IRA, Roth IRA, or 401(k) not only helps you build long-term wealth but it can also provide immediate or future tax benefits. Contributions to a traditional IRA or 401(k) can reduce your taxable income in the year you earn the income and while qualified withdrawals in retirement are tax-free with a Roth IRA. But investing in yourself can also be just as valuable. Taking a course or earning a certificate can not only open doors to higher income opportunities — some of those costs may qualify you for the Lifetime Learning Credit worth up to $2,000 annually to help offset the cost of continued education.
Financial resilience isn’t built overnight and comes from consistent and informed choices that will add up over time. Regardless of if you’re adjusting to economic times or laying the foundation for long-term goals, working to take control of your finances will help you stay steady and prepared for whatever comes next.
