It’s finally happened: For the first time in more than four years, the Fed has agreed to lower the benchmark interest rate by 0.5%. The stock market popped off last Thursday in response to the announcement, signaling hopes that this will give the economy the caffeine fix it needs. But don’t get your hopes up for more big cuts in future months — Fed Chair Jerome Powell said that “we’re not going back” to a world of ultra-low rates.
As for what you can plan for? A few things.
Pouncing on a dream home or refinancing, now that mortgage rates are down.
New job opportunities. Interest rate drops are great for the labor market.
Lower car loan and credit card rates, which should also go down in the next few weeks.
Keeping your HYSA, even though its interest rates will likely also dip.
Staying in Bitcoin (if you're still in it), since it also fared well after the announcement.
— AJ Cohen, editor, Brooklyn NY
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Follow the Money
How the news affects your finances.
How to Feel Financially Secure Without a Full-Time Job
We don’t have to remind you of the downsides to working a traditional nine-to-five, but just in case —inflexible schedules, office politics, and lack of autonomy are just a few gems. The truth is, you don’t have to rely on one place where you spend all your time and energy for that one paycheck. A lot of workers are choosing “portfolio careers” (or, a workload compiled of several different gigs) over being married to one company, or heck, even one industry. Whether it’s a side hustle, multiple contracts, or “overemployment,” the goal is the same: more freedom… well, and extra cash.
However, with all that freedom comes added responsibilities that used to be handled by HR, like payroll. Working in the gig economy or planning to ditch corporate life to be your own boss? Get the financial basics covered with these top tips for freelancers.
Your move:
Separate your business and personal income. Set up a business bank account. Then, take out a portion of your net income as your "salary" and transfer it to your personal bank account. This could either be a certain percentage of each check, or a flat number every month. “I had a client who struggled with irregular income for years until setting up a payment system for himself,” says David L. Blain, CFA, the CEO of BlueSky Wealth Advisors, who often works with self-employed clients. “His business and personal finances stabilized immediately.”
Track invoices and expenses diligently. You don’t need to be a spreadsheet wizard to stay on top of this. There are plenty of online tools and systems for contractors to manage cash flow, but the best one is the one that works best for you.
Know what you owe. When you’re your own boss, taxes get complicated. Familiarize yourself with freelance tax rules — especially if you’re earning 1099 income. You might need to pay estimated quarterly taxes if you hit a certain threshold, and your tax strategy, including the way you handle deductions, could change if you decide to register as an LLC. It gets confusing, so consider chatting with a pro — it’s worth it. “One of my clients saved over $15,000 in taxes the first year just by properly documenting deductions,” shares Blain.
Diversify. Having multiple streams of income or clients is all part of building your safety net. If you’re a writer, also offer editing or consulting services. This helps avoid money problems during slower periods — and there will be slower periods, so prepare to ride the wave.
Ask An Expert
We asked you to vote on a question you’d like answered. The winner was:
My job is giving me anxiety, but I can’t quit. What can I do?
FEATURED EXPERT:
Shavon Terrell-Camper
mental wellness coach and founder of Leveraging Your Reality
First, take a deep breath. Then, make these subtle mental shifts that can help tame your anxiety.
Determine your biggest stressors. Free-floating anxiety can feel all-consuming, but pinpointing why you're so anxious helps make it clearer which tools you need to change that. If deadlines are overwhelming, let your boss know what’s on your plate. If it’s a demanding client, set clear boundaries.
Consider reality vs. perception. Your boss has had a ton of closed-door meetings recently, and your brain may automatically assume the worst. But there are other reasons why she could be less available: Maybe she’s dealing with a personal crisis or managing a huge project. Instead of worrying, book a meeting to see if you can get clarity. “Our perception has a major impact on how we understand situations,” says Terrell-Camper. “If you look at something through a negative filter, you see problems.”
Keep your priorities in check. Yes, a paycheck is important, but placing too much importance on work can put the rest of your life off-balance. “Too often people look to get most of their needs met at work,” she says. They want work to provide not just a salary, but a social life, fulfillment, and entertainment. This doesn’t all need to be met by your job.
Focus on what you can control. You can’t change everything at work, but you can update your LinkedIn profile, reach out to former colleagues, and look at other jobs. “Making changes can help alleviate your anxiety,” says Terrell-Camper.
5-Minute Money Tip
One act of financial self-care you can do in five minutes.
Lower your grocery bills with the “6-to-1 method”
Instead of racking your brain for separate, complicated meals, make a shopping list that follows a format of six veggies, five fruits, four proteins, three starches, two sauces or spreads, and one “fun” item. This serves as your ingredient base for the week (not counting pantry staples like cooking oils and spices). Think of this as a low-tech method to stretch your grocery budget. By giving yourself a limited list, you’re avoiding a cart full of unnecessary extras, like ingredients you’ll only use for one recipe, which can jack up the total bill.
Here’s an example list:
Veggies: Dark leafy greens, cucumber, onions, squash, carrots, mushrooms
Fruits: Blueberries, apples, bananas, avocados, oranges
Starches: Bread, pasta, brown rice
Sauces/spreads: Hummus, pasta sauce
Fun item: Break-and-bake cookies
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