The American economy is always changing. Have you prepared for what may come next? The best way to prepare for the unexpected is to future-proof your finances so you can handle whatever comes your way.

Here are a few good places to start:

Start saving for retirement

Nearly all of us will retire eventually. There will come a day when you'll leave the workforce—either by choice or by necessity. When that day arrives, you may find you'll have to rely on your own savings to keep up with your day-to-day living expenses.

While nothing in life is guaranteed, starting a retirement savings account early on in your career is the best way to ensure you'll have sufficient funds to support your lifestyle in retirement. This isn't just because starting early means you'll save for more years. You'll also have the opportunity to tax-deferred growth thanks to your ability to plan ahead. The earlier you start, the more opportunity you may have for that account to compound.

Downsize your dependency rate

Your dependency rate is the “amount of your paychecks that you depend on”. If you spend 90 percent of your paycheck before the next one comes in, that's your dependency rate. The lower your rate, the better you'll be able to weather tough financial times.

Bringing down your dependency rate will take patience, practice and careful budgeting. Working from this concept now will save you future stress if you should one day find yourself forced to cut spending due to changing circumstances. Looking for ways to entertain the kids? Try building a fort at home over going out to the movies. Ask yourself the seemingly simple question when making a purchase: is this something I really need? 

Create a rainy day fund

The terms "emergency fund" and "rainy day fund" are sometimes used interchangeably, but these two types of savings have slightly different purposes. While an emergency savings account can help sustain you while you're out of work, a rainy day fund is there to cover one-time expenses due to an actual rainy day (like storm damage to your home) or another unexpected cost.

Sooner or later, you will have to pay for some sort of repair, replacement or investment; perhaps your car breaks down, your dishwasher stops working or the siding of your home sustains wintertime ice damage. In these cases, your rainy day fund is there to help cover the costs so you don't wind up dipping into your everyday living expenses.

Have an emergency fund, too

While saving for the distant future should be a priority, it's also important to prepare for the near future. You never know when you'll have an emergency, whether it's an unexpected job loss or a serious injury that sidelines you from the workplace for a few weeks. Having a stash of cash stocked away can help reduce financial stress during difficult times. The ideal emergency fund has a minimum of three months' worth of living expenses; this way, you'll have time to get back on your feet—literally or figuratively.

Update your resume

In the event that you lose your job, your emergency savings account will help you financially bridge the gap between your previous position and your next gig. But the smaller that gap is, the better—even though the emergency fund is there for your benefit, it's best to not use it all up at once. That's why having an updated resume is always a good idea, even if you're not currently job hunting. Make notes of key accomplishments and the skills that you have gained in your current position. When you’re just starting your job hunt, many of your key accomplishments may not be top of mind. When you make an impact at work, be sure to document it, this will give you more refined and detailed talking points when you land an interview.

Start a side business

Adding to your income streams can improve your financial security. Say you have a full-time job but also walk dogs in the evenings or on the weekends. Should something happen that causes you to lose your job, you'll still have revenue coming from your parade of pups to help you get by while you look for a new opportunity.

Pay down debt

Debt can be expensive, not only because you have the initial amount you borrowed to pay back, but because you accrue interest for each month that your balance remains. However, financing is necessary for most of us. The key to managing your debt is to do it wisely. Make sure to:

  • Use personal finance management software or keep a spreadsheet of your existing debt and what you’re paying in interest
  • Look for ways to get better rates like transferring your balance to a new card
  • Consider consolidating revolving debt with higher interest rates into a fixed rate loan (home equity and mortgage refinance options are great for consolidating debt)

Do you have questions about what you need to do to future-proof your finances? Speaking with a financial advisor can help you create a plan to prepare you for the years ahead. If you're not quite ready for a meeting, opening a savings account is a good first step. 

Disclosure

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC and are not insured by credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union, are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. OnPoint Community Credit Union and OnPoint Wealth Management & Investment Services® are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Raymond James privacy policy. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

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