A Year in Review & Looking Ahead: Pete’s Next Dollar Plan

2022 was a challenging year for the economy. The market is down ~15%, inflation is up ~8%, and we’ve been in and out of a recession this calendar year. If you’re feeling less confident about your financial health, these statistics support your feeling. Your grocery trips, utility bills, and gas station fill-ups are more expensive than ever. Pension Fund’s long-held investment and fixed interest rate model protected its members from the ups and downs of the markets this year while accounts invested elsewhere saw their account values fluctuate, which likely increased their financial anxiety. As everything around us is getting more expensive, you might be wondering where we are headed in terms of the economy and what you should be doing to prepare. The good news is that “good medicine is good medicine.”

Regardless of the variables we cannot personally control (inflation, the overall market, recession threats), we can make decisions that positively impact our financial health. One of the best things we can do to improve our financial health is to have a “Next Dollar Plan.” The idea of this plan is that regardless of its source, you should always know where an extra dollar should be placed. Establishing this plan will require you to know both your top financial priorities and a baseline for your monthly expenses. Let’s dig into an example.

Let’s say your monthly take-home pay is $3500, and your expenses are $3000. In this scenario, your “margin” is $500/month. Now, shift gears a bit. What are your financial goals?

• Do you want to increase your emergency savings account?

• Pay down an outstanding debt?

• Save for future purchases (car, vacation, etc.)?

For illustrative purposes, let’s assume your top goal is to increase your emergency savings account. Each month your $500 of margin should automatically be placed in your emergency savings account. Any “extra” dollars you have should follow that $500 contribution. Receive a tax refund? Emergency savings. Spend less than you budgeted for? Emergency savings. Cash in a birthday card? Emergency savings. (I think you get the idea.) If you have a Benefit Accumulation Account, this is a great place to start building up your emergency savings.

Remember, we can’t control the big picture, but we can find financial security, stability, and education in our own lives. As you look toward the new year, there are many small steps you can take now that help you reach your goals in the future. Does your “Next Dollar Plan” include saving for your future? Your Area Director can help you get started. Reach out to schedule a one-on-one.