Dec 05, 2022
4 mins read
Since the end of the Great Recession in 2009, the U.S. economy has undergone a period of rapid growth, almost non-stop. Today, the recovery is still going strong, with U.S. jobs numbers showing signs of improvement on Wednesday morning. And while it might seem like new opportunities have magically appeared overnight, there’s often a dark side to these blessings as well as a darker cloud looming over the horizon. When the economy is in bad shape, it can mean that people are less able to make ends meet and more prone to poverty. This is particularly true for low-income Americans who typically lack access to reliable jobs or who struggle to save for their future. Fortunately, there are a number of ways you can take action when the economy is really struggling and help fight against unemployment and inflation through smart financial planning and other measures that work for you personally and professionally.
When the economy is really bad
The U.S. economy has been in freefall since the beginning of the Great Recession. As a result, many businesses have closed or been forced to shutter their doors. If you’re one of these small businesses, you may be able to save a portion of your income by taking advantage of the tax breaks and deductions that big corporations and the wealthy use to gain an advantage over their competitors. For instance, if you own a chain of coffee shops or sell online, you can lower your taxable income by taking advantage of the lower federal income tax rate on coffee sales. And if you operate a medical facility and specialize in heart disease or cancer care, you can claim a lower Medicare care reimbursement rate than if you conduct medical research at a loss.
If you want to avoid becoming a statistic, it’s critical that you set boundaries early. Start by saying no to everything that comes to mind when you think of the economy. No shopping, no skiing, no hiking, and so on. Limit your negative self-talk so that you don’t spend unnecessary time thinking negatively about others or yourself. “It’s not my problem, it’s yours,” you might say to yourself. Set boundaries so that you can focus on what’s working and what’s not working for your situation.
Make use of your tax dollars
If you have the means to do so, get involved with your local community or choose to operate a business located in a state with a target income tax rate lower than your state’s. This way, you won’t have to pay income taxes on the amount that would otherwise be held in your account. It can also be an excellent way to avoid paying income taxes on capital gains or foreign profits that you’ve made outside the U.S. or that you have income that can’t be used as a returns. Deducting your income taxes can be a great way to avoid having to pay significant amounts of taxes in the future. If you have the means to do so, get involved with your local community or choose to operate a business located in a state with a target income tax rate lower than your state’s. This way, you won’t have to pay income taxes on the amount that would otherwise be held in your account. It can also be an excellent way to avoid paying income taxes on capital gains or foreign profits that you’ve made outside the U.S. or that you have income that can’t be used as a returns.
Learn how to manage risk
As you begin to take control of your financial future, you’ll start to understand the various risks and rewards that come with managing your investments and money management products. When you have a plan for how and when you’re going to use your money, you’re better positioned to take a risk that could pay off in the long run. As a simple example, if you manage your money wisely, you might end up investing in a high-quality resource extraction company that can provide a long-term benefit to your community and country. When you start taking full responsibility for your own money management, you’re more likely to invest in high-quality resources that will provide a long-term benefit to your community and country.
Don't put too much on crypto
Yes, you heard it. Crypto is speculative and do not put more than you afford to loss. When the economy is bad, crypto investment is a gamble. You want to make sure you have enough left for emergency spending rather than gambling!
The American economy is doing pretty well these days – perhaps even well enough to sustain the U.S. as the leading world economy for the next decade or more. If the economy continues to perform as well as it is right now, then we’re in good shape. However, when the economy isn’t doing well, then there’s always the shadow of a darker cloud that can cast a shadow of uncertainty over the future of millions of Americans. The best way to combat this is to set boundaries early and use your tax dollars to benefit your community and your state. Then, when the economy starts to tank, you can take action to keep your income tax rate as low as possible, and you can also take advantage of government tax breaks that lower your overall tax bill. With hard work and a little luck, you can achieve great things when the economy is in good shape.
**Not financial advisor...
Photo by Mehdi MeSSrro on Unsplash