There are many ways to manage finances with techniques that have been sound advice since seemingly forever. The strategies for managing finances and investments used by your parents and grandparents should be learned and applied to your present day toolbox of financial utilities. What is also good, however, is to keep abreast of modern day strategies as well as changes in the economy that can and will affect how to manage your money.
Economic Changes In 2016
There are several economic updates to be aware of in 2016. Being “in the know” when it comes to these changes and updates can help put you in a position to make the most of your finances. Here are three financial moves that you can read about and put to good use:
Rising Healthcare Costs
According to the Centers for Medicare and Medicaid Services, the overall average rate of the benchmark healthcare plan will increase by about 8%. How can you put this knowledge to good use? Well just be aware that if you are a healthcare.gov consumer, then you potentially stand to be paying about 8% more this year than you and/or your family did in 2015.
There are some options for you, if you’d like to offset this 8% increase, however. First, you must know that you do not have to stay in the same healthcare plan. This is good news! For example, In 2015, 30% of HealthCare.gov customers shopped around and were able to choose different plans. Also, you can look into something called Advanced Premium Tax Credits. If your household qualifies, you can use these tax credits to help recoup some of your healthcare costs from the previous year.
Rising Interest Rates
The Federal Reserve has not raised interest rates in a long, long time. Well, it is now 2016 and some things have changed. The fed has raised short term interest rates from .25 to .50. The Federal Reserve generally only raised rates when the economy is doing good. So this can be seen as a good sign, since obviously the fed feels that the economy is recovering since some of the double dip recessions the United States has been experiencing since 2008.
How can you put this knowledge to good use? Well for starters, consider putting a priority on paying off your high interest debt. You see, the biggest impact of higher interest rates will be on borrowers who have variable rate debt such as credit cards. So as interest rates rise, you will definitely want to pay off as much of your debt as possible.
On a good note, higher interest rates mean that keeping your finances in cash can be a good thing. You see, in general, when the fed raises rates, investments in savings, money market funds, and cash will have improved yields.