September Financial Check-In: What You Should Know About Your Money This Month

September Financial Check-In: What You Should Know About Your Money This Month

Did you know September is officially National Self-Improvement Month? This makes it a good time to ditch the junk food, join a book club—and stay informed about the current events that could affect your finances this fall.

Luckily, we’re here to help you out with that last goal. The past 30 days have been chock-full of money news, from skyrocketing stocks to just-released government statistics on the price of parenting.

If you missed some of those headlines, fear not—we’ll get you caught up in no time. So read on to help boost your current events IQ, which is one of the most important self-improvements you can possibly make this month!

News flash #1: When Yellen talks, everyone listens.
The Federal Reserve’s August conference for economists and central bank officials in Jackson Hole, Wyo., was an eagerly anticipated event, given that many market watchers were waiting with bated breath to get clarity from the Fed on where the U.S. economy may be headed.

Fed Chair Janet Yellen delivered some cautious optimism: Yes, the U.S. unemployment rate is falling, and the job market has generally improved since last year—but wages are growing slowly, and there’s still a decent percentage of people who can’t find full-time work.

Translation? The economy still isn’t strong enough for the Fed to start raising short-term interest rates, which have hovered near zero since 2008.

Some critics warn that if the Fed doesn’t raise rates soon, inflation could set in. Many economists have predicted that rates could go up in the summer of 2015, but Yellen gave no further details on timing. The bottom line: The Fed is either still in wait-and-see mode, or keeping their interest rate plans under wraps for now.

News flash #2: Boom or bust? What really could be in the future for the stock market?
First, the good news: U.S. stocks have been in a bull market for more than five years. Now the bad: We’ve been riding the bull for so long, it may almost be time for us to get bucked off.

At least that’s what some well-known financial minds predict. Yale economics professor Robert Shiller, for instance, says current stock valuations are at “worrisome” levels, based on a metric he helped develop that compares stock prices with corporate profits. The last time his stock-market measures reached such high levels, major market drops soon followed.

Meanwhile, Carl Icahn, founder of Icahn Capital Management and one of the country’s most revered investors, believes America is in a “dangerous financial situation” because of the combination of Fed policy, unemployment and income inequality. And ex–Treasury Secretary Robert Rubin and Harvard professor Martin Feldstein believe the trickle-down effect of low interest rates could prompt a financial crisis.

Doesn’t look like Wall Street has been listening to the naysayers, however. The S&P 500 surpassed the record-setting 2,000 mark in August. Which bodes the question: If we’re in a bubble, when will it burst?

News flash #3: The global economy is going gray.
This isn’t an issue some good hair dye can fix. The world’s senior population will boom over the next few decades, which may have big implications for economic growth.

Right now, just three countries—Germany, Italy and Japan—are “super aged,” meaning more than a fifth of their population is over 65. But a new report by Moody’s Investors Service predicts that a whopping 13 countries will meet that standard by 2020, and 34 will hit the mark by 2030, including the United States.

So what’s the big deal? Well, older citizens means fewer people in the workforce, as well as a lower savings rate—both of which can conspire to stunt economic growth. In fact, Moody’s predicts global growth could slow by one percentage point over the next decade.

Policy reform and efforts such as raising the retirement age, investing in technology that boosts worker productivity, and encouraging certain segments of the population (like stay-at-home moms) to return to the workforce could help the situation. But the bottom line is we’re all in for a big demographic shift that could put a drag on the economy if we remain unprepared.

News flash #4: Why new parents should brace for sticker shock.
Diapers: $60 a month. Back-to-school supplies: $670 a year. Having a kid? Priceless. Well, actually, make that $245,340.

New findings reveal that's the average amount you'll have to shell out to raise a child born in 2013 through the kid's 18th birthday—and, no, that doesn't include the cost of college.

Of course, the price tag varies depending on where you live. Families in the urban Northeast spend the most at $282,480, while those based in the South pay closer to $230,000.

To get a more accurate estimate of what your new addition could cost you, run the numbers on this calculator from the U.S. Department of Agriculture.

Last but not least, here are some newsy money stats you can pull out to impress fellow guests at that next cocktail party:

  • According to an analysis by Neil Irwin of The New York Times, the purchasing power of the average American family has dropped 3.1% since 2009. Given this, it should come as no surprise that 76% of adults doubt their children will be financially better off than they are.
  • A new survey of 401(k) participants, by Charles Schwab, finds that one third of Americans spend less than an hour researching retirement savings plans—yet more than half devote more than four hours to debating which new car to purchase.
  • Did you work your butt off this summer while your co-workers took full advantage of summer Fridays? Well, you may be in for a sweet bonus: New research finds that companies are devoting 12.7% of their payroll to performance-based pay in order to reward their superstars.

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.


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