America's streets may no longer be paved in gold thanks to the recession that began five years ago. It wiped out the personal wealth of a majority of Americans, setting them back 20 years in terms of financial strength, according to a report issued by the Federal Reserve. However, the U.S. shouldn't be counted out of the game too soon. The potential to earn more and increase personal wealth is still improving, according to the Labor Department, and having a good financial plan can help you create a strategy to recover from the storm.
Have a safety net
One of the biggest stumbling blocks for Americans is that they can't seem to keep their hands out of the cookie jar. In terms of personal wealth and savings, this means opening an account that was originally intended for rainy-day savings doesn't wind up being put toward that use, according to Bankrate. In fact, only about 25 percent of all adults in the U.S. have some sort of dedicated savings, according to the results of a survey the company administered.
The source said that about six months' worth of savings is essential to remaining intact during an emergency like unemployment or another event preventing you from earning money like the birth of a child or serious illness.
Don't cling to status
Sometimes sucking it up and taking the fall is necessary in order to stay financially afloat. The Federal Reserve report published by the Washington Post stated that middle class families were hit hardest by the economic downturn, in some cases pushing them back to lower-class status, but if that's what's necessary to recover, so be it. A very good financial tip for households in this position is to not try and live above your means through lending or elaborate purchases. Don't be afraid to shop at bargain or wholesale stores. These are habits that can even help keep costs down after income and savings have been restored.
Reduce your bills
It may seem like a hardship, but wiping out debts will make it easier to save money. According to The New York Times, nearly 75 percent of U.S. families are carrying debt in the form of loans or credit, and the interest rates here could be short circuiting attempts to cut expenses. With Americans already facing an average 40 percent reduction in personal wealth since 2007, there's no reason to sabotage financial wellness by continually paying more than is necessary toward a high-APR credit card or long-term mortgage. Paying down as much and as quickly as possible is key.