by Amanda O'Brien | Accounting News, Credit Card Debt, Debt, Financial goals, News, Newsletter, Retirement Savings
Recent surveys reveal that Americans spend hours each week thinking about their finances. Rising prices, mounting debt, and uncertainty about the future all contribute to financial stress. Add in steep housing costs, concerns over tariffs raising the price of goods, and lingering worries about retirement savings, and it’s no surprise that, according to a Bankrate survey conducted earlier this year, more than 43% of Americans say money negatively affects their mental health. In this article, we discuss what’s driving financial worries and offer strategies to boost financial security.
The Pressure of Rising Costs
Inflation continues to affect nearly every aspect of daily life. Food prices have increased more than 20% over the past three years, straining household budgets. And home prices and mortgage rates remain high. This puts a big question mark on home ownership for the younger generations. In fact, according to NAR (National Association of REALTORS) data, the number of first-time home buyers—typically led by younger Americans—dropped to 1.14 million in 2024. That’s the lowest level on record since the NAR started tracking first-time buyers in 1989. Renters face struggles as well, with average rents increasing more than 25% since 2019.
Tariffs also play a role in pushing prices higher, which trickles down to consumers. For small businesses and households alike, higher costs on goods and materials add to financial pressure.
Debt and Retirement Worries
Credit card debt has been on an upward trend since 2021. The rising costs of necessities like housing, groceries, and gas have pushed many Americans to reach for credit cards just to make ends meet.
At the same time, Americans are concerned about their financial futures in retirement due to a lack of savings, market volatility, and uncertainty surrounding Social Security. A 2024 Bankrate survey discovered that 57% of Americans worry they are falling behind on building an adequate nest egg.
What Helps Ease Financial Stress
Three main factors that contribute to easing concerns about money are: higher income, reduced debt, and broader economic improvements. For example, when inflation cools and wages go up, people are better prepared to plan and save.
Younger Americans, in particular, worry about job security, with layoffs and limited career opportunities top concerns. A strong labor market creates stability and more spending power. When jobs are steady and paychecks grow, people feel more secure about their money. That confidence shows up in how they spend, save, and invest, and it gives the economy an extra boost.
Practical Solutions
While we can’t control factors like inflation, tariffs, or the broader economy, there are steps to take to get back on the right path. Here are some ways to improve financial stress:
- Build a budget. Tracking income and expenses provides a clear picture of where money is going and helps pinpoint areas to cut back.
- Start an emergency fund. Even starting with a small cushion of $500–$1,000 can ease stress and help prevent the need to rely on high-interest credit cards when financial emergencies happen.
- Focus on paying down high-interest debt. Prioritize credit cards and personal loans first. Knocking out those high-interest balances frees up money in your budget and helps create financial security.
- Increase retirement contributions gradually. Setting up automatic transfers into a 401(k) or IRA, even starting with 1–2% of income, helps build long-term savings.
- Seek advice and guidance. It’s no secret that many Americans are facing financial insecurity right now, but the good news is that there are plenty of trusted voices and perspectives to lean on. Seek out free tools and workshops that can help with decisions and planning, which you can find through many employers, banks, and community organizations. And don’t discount reading articles and newsletters, listening to podcasts, and following social media accounts of reliable sources. These can all improve financial literacy and help you make informed moves with your money.
Inflation, housing affordability, and rising debt continue to weigh on Americans’ minds, but the information and strategies above can help ease worries and create a path to financial stability.
by Jean Miller | Business Growth, News, Newsletter, Small Business
For small businesses, growth is both a challenge and an opportunity. To navigate this journey successfully, entrepreneurs should rely on practical strategies that ensure sustainable growth. Here are some proven approaches to help your small business thrive.
Control Cash Flow Effectively
A healthy cash flow ensures that you can cover expenses, invest in growth opportunities, and withstand unforeseen challenges. Start by regularly monitoring your income and expenses. Utilize accounting software to track financial metrics and forecast future cash needs.
Additionally, consider negotiating better payment terms with vendors or offering early payment discounts to clients. By maintaining a steady cash flow, your business can avoid unnecessary financial stress and seize growth opportunities as they arise.
Address Rising Costs Proactively
Inflation and rising operational costs can eat into your profits if not managed carefully. Perform regular audits of your expenses to identify areas where you can cut costs without sacrificing quality. Renegotiate contracts with suppliers or explore alternative vendors to secure better deals. If rising costs are affecting your profitability margins, think about adjusting your pricing strategy.
If rising costs are impacting your business’s profitability, rethinking your pricing strategy might be a good move. To adjust prices effectively, monitor market trends, analyze competitor pricing, and clearly communicate the value of your products or services to customers.
Investing in energy-efficient equipment or adopting cost-effective technologies can also help reduce long-term expenses. By keeping costs under control, you can allocate more resources toward growth initiatives.
Hire and Retain Top Talent
As your business grows, hiring and retaining skilled employees becomes crucial. A strong team is essential for managing increased workloads and driving innovation. Start by creating a clear hiring plan that outlines the roles you need to fill and the skills required.
Focus on offering competitive salaries, opportunities for career development, and benefits like healthcare, paid time off, and 401(k) plans to attract top talent. Retention is equally important—foster a positive work culture, recognize employee achievements, and provide ongoing training to keep your team engaged and motivated.
Prioritize Areas That Need the Most Support
Every business has areas that require extra attention during periods of growth. Identify the departments or processes that are struggling to keep up and allocate resources accordingly. Whether it’s marketing, customer service, or production, addressing bottlenecks will improve overall efficiency and customer satisfaction. Regularly assess your business operations to identify pain points and prioritize them in your growth strategy.
Invest in Digital Tools and Automation
Small businesses must leverage technology for long-term growth. Digital tools and automation can streamline operations, reduce errors, and save time. Consider investing in customer relationship management (CRM) software to improve customer interactions or project management tools to enhance team collaboration.
Automation can also be applied to repetitive tasks such as invoicing, inventory management, and email marketing. By implementing the right tools, your business can operate more efficiently, providing a path for your business to scale while you focus on other key initiatives.
Diversify Your Sales Strategy
Relying on a single revenue stream can limit your growth potential. Diversifying your sales strategy helps your business stay on track in the face of market changes. Explore new markets, introduce complementary products or services, or expand your online presence to reach a broader audience.
Embrace e-commerce platforms and social media marketing to connect with customers in innovative ways. Diversification not only boosts revenue but also enhances your business’s adaptability to changing customer demands.
by Jean Miller | Accounting News, Business Growth, News, Newsletter, Small Business
With less than three months before the 2024 presidential election, inflation remains stubborn and economic uncertainty continues. Both political and economic unpredictability can create volatility that requires businesses to be more strategic with financial management. Read on as we go over steps small business owners can take to ensure sustainable growth and financial stability.
Improve Operational Efficiency
Maximizing operational efficiency is crucial for ensuring long-term growth. Here are a few key things you can do:
- Streamline processes, automate repetitive tasks, and optimize your supply chain to enhance productivity while reducing costs.
- Evaluate your business operations regularly to identify bottlenecks or redundant activities.
- Implement technologies such as project management software or cloud-based solutions to make your business more agile, allowing you to respond swiftly to market changes.
Control Costs
Effective cost management is key during periods of economic uncertainty. Start by analyzing your financial statements to identify areas where expenses can be trimmed, such as:
- Renegotiating contracts
- Eliminating wasteful spending and scaling back on discretionary spending
- Searching for more affordable suppliers without compromising quality
- Optimizing your marketing budget
- Downsizing inventory.
Keeping a lean operation allows you to preserve cash that can be redirected toward initiatives that directly impact growth and stability. It also allows your business to remain flexible and better prepared to navigate financial challenges.
Seek Strategic Financing Options
While financing is pricier in today’s market, that shouldn’t stop you from getting the funding your business needs. Stay open-minded and flexible, explore creative solutions, and look at different financing options. In addition to traditional bank loans, consider alternative financing solutions such as Small Business Administration (SBA) loans, crowdfunding, or venture capital. These options often provide flexible repayment terms and are tailored to support businesses during challenging periods. Additionally, maintaining a good credit profile increases your chances of securing favorable financing terms when needed.
Focus on Customer Retention
Increasing customer retention rates can have a significant impact on your bottom line. Even a small boost in retention can lead to a large increase in profitability. Loyal customers tend to spend more over time and are more likely to refer others to your business. To build a loyal customer base, focus on delivering exceptional service, personalizing your interactions, and providing consistent value. Consider implementing strategies like loyalty programs, exclusive discounts, and proactive communication. Prioritizing customer retention not only stabilizes revenue but also strengthens your brand in uncertain times.
Economic and political uncertainty doesn’t have to be a roadblock to growth. Weather uncertainty by focusing on operational efficiency, controlling costs, retaining customers, and seeking financing options that support your long-term objectives.
by Daniel Kittell | Accounting News, Construction, Industry - Construction, News, Newsletter
Understanding how economic trends influence construction can provide valuable insights for businesses and professionals in the field. For instance, high interest rates and slower economic growth will put increasing pressure on construction and manufacturing this year. Here’s a comprehensive look at how the current economic landscape is likely to impact construction in 2024.
Inflation and Interest Rates
The economy is still experiencing inflation pressures from energy prices, wages, and consumer spending, which impacts project financing.
Additionally, with interest rates playing a pivotal role in construction financing, the Federal Reserve’s actions this year regarding cutting interest rates hold significant sway. Lower interest rates will stimulate borrowing for construction projects, reducing overall borrowing costs for businesses and clients. This creates incentives for investment in construction ventures, particularly in the residential sector.
Supply Chain
Late last year, construction companies were still facing supply chain issues, but construction firms can expect supply chain improvements as the year progresses, which will help reduce delays in construction projects. The pandemic changed communication methods between the construction industry and suppliers, with construction firms adopting communication technologies to streamline material ordering workflows. With access to more complete and speedy information, construction firms are empowered to keep projects on track.
Labor Market
The construction job sector experienced growth last year. However, construction job openings have decreased recently, even though wages have increased by 4.9%. This highlights the importance of competitive pay and innovative training programs to attract and retain employees.
Recession Worries
Higher employment and higher wages create more spending power and add to the supply and demand issues perpetuating a potential recession. With interest rates stalling and contributing to a decrease in project financing power, an economic recession is still top of mind for businesses. While signs at the moment are pointing to a soft landing, the construction industry should still be preparing for economic shifts.
Shifting Geopolitical Landscape
The Israel-Hamas conflict heightens concerns about the possibility of broader tensions in the Middle East, which could potentially impact energy and other raw material prices. U.S. sanctions on Iran might exacerbate these issues, while ongoing tensions between the U.S. and China could contribute to inflationary pressures.
by Jean Miller | Accounting News, News, Newsletter, Small Business
Small businesses are not immune to the effects of broader economic shifts. As highlighted by the pandemic, major global and domestic events have the potential to profoundly influence businesses across the board, regardless of size. In 2024, larger economic conditions and fluctuations could have a significant impact on small businesses. Read on as we delve into four hurdles that have the potential to affect small businesses this year.
Economic Uncertainty
The previous year presented challenging economic hurdles for businesses of all sizes. Surging inflation significantly affected businesses, leading to spikes in overhead expenses and interest rates. Although recent data from the Office for National Statistics (ONS) indicates a gradual decline in monthly inflation rates, they still surpass the government’s targeted 2%. Small businesses will likely feel a greater impact compared to more established businesses, given their absence of cost-saving benefits from economies of scale, which typically provide some breathing room during challenging economic climates.
Political Tensions
Election years can introduce some unpredictability and prompt a certain level of economic insecurity. Businesses and investors may hesitate to make significant decisions until they have clarity on the direction of future policies, which can lead to a slowdown in economic activity. Additionally, campaigns and debates that focus on economic issues can contribute to market volatility.
International Instability
Ongoing geopolitical pressures, such as the conflict in Ukraine and the hostilities between Israel and Hamas, can affect international trade and the overall U.S. economy. These tensions, as well as others around the globe, have the potential to spark trade conflicts and disrupt the international movement of goods and services, potentially resulting in shortages of raw materials and production delays. This, in turn, can escalate import and export expenses, contributing to overall price hikes.
Is a Recession Happening?
This has been the question posed by businesses and consumers since late 2022. A lingering uncertain economic forecast could make companies hesitant to invest in bigger expenses, such as new research, equipment, or real estate. While the Federal Reserve’s incremental interest rate hikes have helped to suppress inflation, whether or not we’ll come out of this economic rollercoaster with a “soft landing” is still a question mark. Small businesses should still be preparing for the possibility of a recession this year.
